Case study: Business rescue

A group of specialist printers included two printing plants, one specialist printer that was trading profitably, the other general printers which was incurring losses.  Overall the Group had a positive cash flow.  However, concerned to ensure both plants became profitable, the Directors absorbed a third printing operation into its loss-making subsidiary and replaced its local management with the management team inherited with the merger.

Despite initial success, a fraud was committed by a member of the new management team resulting in a substantial loss of funds which impacted on the Group bank facilities.  The bank threatened to appoint an Administrative Receiver to the group.

Appointed to advise the Directors of the holding company.

A rescue plan was developed which involved the winding-up of the loss-making subsidiary, and the refinancing of the profitable part of the business.  This was accepted by the creditors including the bank.  The specialist printing business was saved.

Work included: -

• Undertaking an investigation into the affairs of the Group and reporting to the Board;

• Working with the management team and formulating a rescue plan;

• Co-ordinating the work of the team involved in developing and implementing the rescue plan, including the Directors, insolvency practitioners and tax advisers

• Placing proposals before the bank and principal creditors of the Group and negotiating the rescheduling of existing indebtedness;

• Advising on the implications of the insolvency of a member of the Group and its financial impact on the surviving business; and

• Making approaches to third party backers and negotiating and securing new working capital facilities for the specialist printing operation.