Restructuring

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 multi-let, commercial investment comprising 80,000 sq ft of industrial space, with bank debt of £2 million. A very poor-quality building in a deprived Birmingham location which was approximately 60% occupied with a rent roll of circa £105,000 per annum. The site was highly management intensive and had numerous repair issues falling under landlord’s responsibility (few service charges in place). These dilapidations were a cause of real concern.

Work undertaken

Through Eddisons – a Begbies Traynor Group consultancy of chartered surveyors and property management specialists – we were able to halt a tenant exodus and restore confidence by undertaking essential repairs and organising nightly security patrols. We implemented an intensive management strategy to ensure that rents were collected in full. We commissioned multiple surveys (asbestos, gas, electric) to ensure health and safety and insurance compliance and secured new lettings, significantly increasing the investment value.

Outcome

Eddisons’ effective management and lettings of the site improved value from £700,000 to achieve a sale of £1.215 million. In addition to this, we secured further income through rents and the insurance claim which together represented a 100% uplift on the initial EOS. Eddisons’ insurance team dealt also dealt with a fire damage issue and secured full value insurance repayments for damaged parts (£200,000).

We assisted a profitable wholesale business that was experiencing adverse cash flow issue due to:

• Incorrect working capital product (overdraft)
• Prohibitive lease, with pending exit and dilapidations liability
• Lack of accounting support for directors to make informed decisions

Work undertaken

Our team of specialists were engaged to facilitate a refinance and support the company through the transition. We also introduced external accountants to assist the existing book keeping function.

Outcome

An invoice finance provider paid out to refinance the bank and provide cash to assist with a change of location.

It was recommended that they engage a new accountant to assist with the implementation of the invoice finance facility and to maintain management accounts, with a view to providing proactive advice.

The business is a market-leading milkshake bar with, at the time, 55 owned and franchised stores across the UK and a small overseas presence. From establishment in 1999, the company grew to a £4.6m turnover business. Due to the downturn in the economy, the decline in the retail market and lack of available equity investment, the business had to be restructured via an immediate sale out of Administration to exit loss-making outlets.

Work undertaken

Our team of restructuring specialists advised the company and the bank pre-appointment, and involved our Corporate Finance team in exploring accelerated mergers and acquisition (AMA) options. The next stage was to negotiate with interested parties for a sale through Administration and assist the directors with pre-Administration trading and control of the overdraft.

This was a complex transaction with numerous challenges which led to a successful sale that subsequently saved the outlets. Predictable challenges included the need to resolve a sale with competing purchasers against an extremely pressing timescale before the Notice of Intention to Appoint lapsed.

We managed to preserve the goodwill of the trading business and manage the landlords while managing the directors’ own objectives vis-à-vis the IPR being owned outside of the bank’s security against their personal guarantee position which complicated the eventual sale.

Led by Mark Fry, our team was appointed by the club Chairman (and owner) due to the club’s insolvent state and imminent formal insolvency.

Work undertaken

Our team operationally managed Hull City FC for ten months, and dealt with the following issues:

• Day-to-day financial management
• Establishing and managing a rigorous reporting arrangement with the club’s leading bank, who were owed £15m
• Regularly reporting to the club’s Chairman
• Managing overheads, including player wages (which we reduced by 30% across all players), transfers, travel, policing and other major overheads
• Reviewed merchandising, retail management and performance
• Reviewed and negotiated licensing arrangements
• Managing the consensual exit of the existing manager and working with the new manager
• Dealing with regulatory authorities, including The Premier League, The Football Association, The Players Association and The Football League
• Dealing with the debts due to both domestic and international clubs in respect of transfer fees, which involved particularly complex negotiations, debt restructuring and visiting numerous foreign clubs
• Dealing with the HM Revenue and Customs authority in the UK and restructuring the payment of significant tax debts
• Running a sales process and successfully concluding a sale after ten months. This sale, while not returning a premium to the owner, protected him from material future liabilities.

Outcome

Hull City FC subsequently returned to the Premier League under its new ownership and represents a highly successful turnaround.

The then-Championship football club – now a Premier League side - had been in financial difficulty for some time, due to its failure to regain top-flight status coupled with the overheads of dropping out of the top division. Under review of its bankers, the club desperately needed to reduce its costs and increase cash flow. Our team of restructuring specialists was approached to advise the directors on a plan to save the club.

Work undertaken

Our team developed an entrepreneurial strategy which recognised and utilised the value of the loyal fan base. If this strategy were to be successful it would require the resignation of board members, which was a major challenge but a necessity. Board members stepped down and a plan was devised to increase gate numbers via an appeal to fans to support the club, and to look at other commercial initiatives to raise income while a buyer for the club was sought.

Outcome

With the outstanding success of the fan base’s contribution, the major secured creditors’ agreement to a consensual restructuring of their debt and existing suppliers dissuaded from taking enforcement action, the club was ready for sale. The club and related assets were successfully sold.

This was a high-profile assignment with continuous media coverage across TV, Sky, newspapers and internet. Mark Fry, Partner at Begbies Traynor Group, managed media relations and this was an important part of the rescue. Careful media relations insured accurate messages about the club’s state were delivered and assisted in the promotion of the club’s sale.

* This was an award-winning case for our team

The Charity delivered motivational mentoring and inspirational educational programmes to children and young adults between the age of five and 19.

The Charity was highly distinguished and received much media attention following support from its Royal Patron, HRH The Duke of Cambridge. The Charity aimed to transform the lives of children by working in partnership with schools around the UK.

Work Undertaken

The core sources of income for the Charity included school partnerships, corporate sponsorships, and corporate fundraising. Following a wave of funding cuts at schools and the negative trading effects of Brexit, income and corporate donations for the Charity drastically reduced.

We acted in an advisory capacity to the Board of Trustees which resulted in the turnaround and restructuring of the Charity.

The work included:

(a) a review of the Charity’s operations, cash flow projections and financial management

(b) a re-organisation of the management team and internal reporting functions

(c) restructuring of activities to maximise cost control and savings

(d) designing a bespoke reporting template and KPIs for monthly reporting and monitoring purposes

(e) ongoing ‘intensive care’ monitoring of financial performance during the turnaround

(f) providing advice on income generation and fundraising

Outcome

This resulted in an entirely successful outcome for the Charity and the future continuation of the activities of the Charity.

Restructuring the business to ensure operational and financial efficiency aided the rescue of the Charity, which might have otherwise been obliged to discontinue its activities and be placed into insolvent liquidation.

The residential and commercial building business was made up of a group of award-winning companies with an established presence nationwide.

Work Undertaken

The business was being over-leveraged due to cross securitised debts across the Group of £300 million.

Appointed by the Board, our Restructuring team undertook a Performance Review of the business to highlight and support the decision to rationalise the business to return it to profitability.

Significant financial modelling was undertaken, and we provided the Board with various options using an Entity Priority Model. The most effective option was downsizing the business in terms of operations and size.

Outcome

We negotiated with all lenders to prove that the Group had a future and could effectively right-size their debts. The team also covered the worst-case scenario by demonstrating what the lenders would receive if the Group went into liquidation.

This was an extremely complex case due to the multitude of lenders involved and the securitisation of debts across the group of companies.

By providing expert advice to the Board, delivering an effective solution, and undertaking lender negotiations, the restructure was successful, and the group of companies continued to trade.

This significant restructuring of a large healthcare group involved the Landlord creditors of more than 100 care homes, two major clearing banks who provided significant facilities to the company and numerous other banks who provided funding to the Landlord creditors.

The Bank was being asked to fund losses at the care home whilst CQC issues, including standard of care and safeguarding issues, were being addressed. Uniquely, this was an incorporated partnership, and as such, risks surrounding creditor pressure fell on the partners’ covenant.

We were initially appointed LPA receivers of the home and continued seamless trading with Bank support, pending a sale.

Work undertaken

The work undertaken by our team during the sales process involved the preparation of the initial marketing material and its distribution to selected parties. This attracted a number of potential buyers which were shortlisted following face-to-face meetings. Turnaround of offers was tight, with receipt of initial offers required within seven business days and final offers within ten business days. The team also negotiated with larger contingent creditors to agree final settlement figures at advantageous levels.

Our specialists provided cash management and guidance throughout the process, as well as managing key stakeholders, including funders, regulators, key creditors, and other equity interests. Ongoing support was provided post-transaction to ensure the smooth transition and orderly wind-down of remaining operations.

Outcome

The ultimate outcome was the concurrent completion of three separate transactions, to three unconnected purchasers, all within 17 business days following instruction. This left a surplus available to shareholders after settling all liabilities.

The solvent disposal of this business resulted in significant shareholder value being protected at a time when insolvency appeared inevitable.

This case provided a significant insight into the problems faced by a care provider of this size and the resultant issues for CQC, Local Authorities and Central Government when a provider of this size is in financial difficulty and under threat of discontinuing trade. There was a significant effort by all stakeholders to recognise these issues and act in a socially responsible way.