The bank’s customer was a niche construction business, specialising in garage forecourt development primarily for supermarket groups.
Situation on Appointment
Trading conditions had been challenging, causing falling revenues and contracting margins. After many years of profitability, the business had recorded large losses in two successive years. Weak trading performance was compounded by high leverage.
Our team’s initial focus was to create a breathing space in which options could be properly explored. This was achieved by negotiating with key creditors, advising on directors’ statutory duties and securing the bank’s continuing support to allow business critical payments to be made whilst otherwise mitigating its exposure.
A viability assessment confirmed that the company had recently secured several profitable contracts and we concluded that if its cash position could be remedied, its trading outlook would be significantly improved. As the company appeared to be viable if properly capitalised, we were able to fully explore alternatives to insolvency and plan for restructuring.