Administration
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Exploring the prospect of refinancing the business (2)
George was the CEO and a principal shareholder of an investment company that owned and developed various projects in the high technology sector, principally related to the innovative uses of the internet. Most of these projects had failed leaving the group starved of development capital for two projects that showed considerable promise. George was talking to existing and prospective shareholders about raising more equity. In the meantime, various creditors had lost patience and started winding up proceedings before coming to us. We sought and obtained an administration order to stabilise the creditor position whilst George continued his discussions. In due course, after considerable effort on his part, he was able to raise ?1m, which equated to 10% dividend, and persuade other creditors to accept equity for their debts. We helped George with negotiations with the main creditors to persuade them that this was preferable to a winding up. We then resigned as administrators and a voluntary arrangement was implemented to distribute this money to creditors.
"Administration is highly effective in stopping creditors in their tracks so you have the time to explore whether you can raise more money from shareholders.
Administrations keeps open the option of saving the company for its shareholders
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