Begbies Traynor Group Reviews

The business was a group of haulage companies with an annual turnover of approximately £20 million and with approximately 150 employees. The core business was time critical delivery of weekly and monthly periodicals.

Work undertaken

Our team of specialists were approached for advice when the group started facing financial difficulty. The reason for the distressed situation was a lack of cash due to the recent investment in a non-core subsidiary of the group.

Our team went into the company and continued to trade the business. They put in controls and restructured the workforce and operational side of the business to allow time to find a suitable buyer.

We approached the largest debtor and agreed the debt, their ongoing support and negotiated a side agreement, which allowed the business to continue to trade and repay debts.

The business was then advertised for sale which generated a number of interested parties that resulted in two offers being made for the business.

Outcome

Our team successfully identified a suitable buyer for the company and also ensured the group’s largest customer was happy with the potential buyer. This outcome resulted in the bank being paid in full, staff and their jobs saved, and dividend being paid to secured creditors in a number of cases.

A portfolio of 145 residential properties based in Reading with a total bank lend of £35 million. This was a complex case and we were appointed due to a technical breach rather than an arrears breach.

Work Undertaken

The properties were largely tenanted residential properties and our team took control of the rental income prior to considering the optimum exit strategy. The bank debt was serviced from the rental income which was originally circa £130,000 per month. The Bank was expecting a loss of circa £17 million at the date of appointment.

Outcome

We put plans into place for phased disposal and managed the strategy from start to finish. This process was undertaken at the optimum time to take advantage of improving market conditions and, ultimately, the Bank’s loss was eventually estimated to be circa £3 million – representing a huge positive swing for the Bank. This liability was also potentially recoverable via litigation against third party professional advisors.

A firm of property consultants and agents with eight offices across London and employing approximately 250 staff provided a broad range of residential and commercial property consultancy services, including letting, valuations and property management. The Company had a strong overseas arm with particular focus on high value property sales and management in the Middle East.

The Company had seen significant downturn in trading activity as a result of poor market condition in the UK property sector and, in particular, to the central London residential market, to which the company had a significant exposure. The Company had incurred losses of £2.7m over an 11-month period and had a significant funding requirement in respect of future taxation liabilities.

As a result of its poor financial position, the Company was struggling to attract new staff which, in turn, hampered their efforts to attract new revenue streams.

Work undertaken

The business also had a significant pension deficit of over £100m which was increasing year on year due to onerous investment parameters for the scheme. This meant that a significant proportion of the fund had to be invested in gilts, which had shown diminishing returns. At the same time, the scheme provided for an annual 5% increase in payments to pensioners.

Despite lengthy negotiations between the Company, its then advisors and the Pensions Regulator, no agreement had been reached for the restructure of the pension deficit.

Significant management time was being expended seeking resolution to the pension deficit position, taking away management focus from day-to-day trading operations.

As the business was a ‘people business’ where much of the inherent value sat with the partner group, it was vital to manage the partner group throughout the sale process to ensure that no disintegration of the group took place. Our work was carried out against a backdrop of competitor companies attempting to recruit key members of the Company’s partner group, either individually or in silos.

In order to minimise publicity around the marketing campaign and, therefore, minimise the risk of competitors seeking to recruit key staff members, BTG drew up a list of potential purchasers of private equity firms and competitors – each being given access to a secure data room after entering into a suitable non-disclosure agreement.

Throughout this period, BTG liaised closely with the Pensions Regulator, the PPF and the pension trustees to ensure that any sale was in the best interest of the pension scheme, which was anticipated to be by far the largest creditor in the administration.

Outcome

Following a period of marketing and subsequent complex negotiations, a sale of substantially all of the Company’s business and assets was completed.

The business and assets of the Company was sold by way of a pre-pack administration sale to a new private equity investor.

The sale protected in excess of 400 jobs, allowed the smooth transfer of client files and in excess of 1000 client bank accounts to the purchaser and provided a material return to unsecured creditors.

As part of the process, the company exited numerous onerous facilities management contracts which were carried out overseas and which generated losses for the company.