Case study - Sheet metal fabricator bought from receivership

BACKGROUND:

Based in Hampshire, this small business had traded for 23 years.

2 years ago the owner had bought out his partner using cash reserves within the company.

Unfortunately - whilst business had remained constant - they were hit with 2 substantial bad debts in quick succession.


These debts, and the loss of key clients left them with no option other than to call in IPs - who promptly put the company into administration.

An informal pre-pack was deemed the best way to save the jobs and (as far as possible) the reputation of the business.

Sadly the landlord and other creditors were unhelpful, so a new business was set up in alternative premises and taking on the 2 employees of the old business.

Next step was to buy the equipment. Whilst it was good engineering equipment, it was very old and comprised a large amount of small tools, hence traditional asset finance companies were unwilling to help.

SOLUTION:

Fortunately we were able to introduce a local privately owned company whose MD met the business owner and was able to advance the full price for them to buy the equipment.

Additionally the customer agreed to a factoring facility with selective credit insurance (insuring debts above £20K in this case). The customer was very concerned about 'lock-ins' - we managed to reduce the minimum term to 3 months.

Finally, the customer agreed to repurchase outstanding book debts from the administrators. Using our contracted debt advisor he was able to collect substantially against these.

OUTCOME:
Phoenexing is not a happy event for an established, reputable business, but we were able to help this customer save jobs and re-build his business following catastrophic events.

FACILITIES:

Hire purchase on aged small tools.

Factoring

Credit insurance (selective).

Debt collection.