Case Studies

Administrative Receivership

Background

An office furniture suppliers had suffered a downturn in business, as on-line office furniture sales and auctions had taken over the market. The company’s bank had been pressing for repayment of their secured loan. Whilst other major creditors were also pressing for overdue payments. Bank pressure became critical for the company and unsustainable.

Solution

The company had received enquiries from several interested parties to purchase the business as a going concern. The company Directors wanted to optimise return by rescuing the ailing business by themselves, whilst maintaining key operational staff and without stepping into unknown boundaries to them.

The options were to negotiate with the Bank to work out a repayment plan within a Company Voluntary Arrangement (CVA). This the Bank were unhappy to risk as it meant they were not in control of the severe indebtedness due and were unwilling to wait for the business to trade out of its difficulties.

The company’s Bank opted to call in their loan under the fixed and floating charge debenture and placed the company into Receivership. The business was marketed for sale and tenders were invited to purchase the business. The business was sold as a going concern within the Administrative Receivership, the whole of the business was sold and the remaining key staff were retained by the new owners, whilst 15 employees were made redundant.