Post on 26-Dec-2015
Using Administrations and the Pre-pack process to protect businesses
www.ifa.org.uk
Steve StokesPartner, FRP Advisory
11.05 - 11.45 pm
Administration – Protecting businesses and preserving value
Steve Stokes PartnerTel: 0121 710 1682 or 07764 989 009Email: steve.stokes@frpadvisory.com
Contents
Introduction Administration Pre-packs Case studies What we are seeing Key messages Questions
Introduction
FRP Advisory LLP FRP has nine offices and employs over 200 staff nationally They offer services to businesses and individuals who are
facing financial or operational uncertainty
Steve Stokes Steve is a partner in FRP’s Birmingham office He has over 14 years experience of advising lenders and
directors on corporate restructuring and insolvency matters across all sectors
Steve has forged strong relationships with both the regional banking community and a variety of intermediaries including accountants and lawyers, providing both them and their clients with a solutions driven approach to the issues being faced
Administration
Available to:-
Limited Companies Public Limited Companies Limited Liability Partnerships Partnership
Entity needs to be, or likely to become INSOLVENT
Main alternative insolvency options are Company Voluntary Arrangement or Creditors Voluntary Liquidation
Administration
Application filed in Court gives moratorium
Application made by:
Company Directors Creditors Holders of a floating charge
Administration
The Administrator must try to achieve the following objectives:-
rescuing the company; if not
achieving a better result for the company’s creditors than if the Company were wound up; if not
realising assets to make a distribution to the secured creditors
Pre-packs
A pre-pack:- achieves a sale of the business as a going
concern, however, negotiations for the sale take place prior to Administration
protects goodwill of the business minimises professional costs removes the Administrators’ ‘Day One’ issues,
such aso working capitalo landlordso employeeso ransom creditorso stock
Pre-packs
BUT lack of transparency directors buying back on the cheap perception issues around ‘best value’ no creditors meeting
Pre-packs
Giving pre-packs a bad name
Press Government Aggrieved creditors
and
……Insolvency Practitioners!
Case Study 1 – Pre pack Administration
Recruitment business Two directors left business Large HMRC debt remained Poor advice from alternative advisor Correct advice……. but not without risks! Accelerated sale process – engaging with HMRC Successful sale Unsecured dividend to creditors
Case Study 2 – Trading Administration
Local garage and body shop Turnover £750k Poor performing body shop function Needed restructuring – could not afford to! Time to pay agreement HMRC pressure Administration – protecting assets Short trading period allowed restructuring Trading successfully following sale
What we are seeing
As growth increases…
cash flow pressures increase in asset values continued difficulty getting funding
……more insolvencies
Key Messages
Preserving value….preserving your client base
Early intervention
Restructuring and insolvency can be a positive solution!