Raising Finance
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Raising Finance Receivership Examples
Using receivership to hive out a viable part of a business to a phoenix
Graham was worried about the approach being taken by his bank. He felt that whilst he had been sustaining trading losses, his plan to retrench the business to viable core products would recover profitability. However, his bank had appointed investigating accountants, who whilst prepared to recommend Graham's plan, were pressuring him to provide personal guarantees. This worried him so he came to see us. We spent a couple of hours talking about the required steps of the recovery and the cash needs. We convinced Graham that he would run out of cash long before profitability could be achieved and that more radical surgery was required. We accompanied Graham to the bank to discuss our concerns and agreed a plan involving the use of receivership to save and sell the viable parts of the business. Graham incorporated Newco, which was prepared to offer above market values and collect the bank's debtor security, which avoided the need for extensive marketing, which would have damaged the business. Funding for Newco's purchase came from asset-based lending that we helped to arrange. The outcome was that Graham was able to move forward with that part of the business that he wanted and the bank was repaid in full without the need for personal guarantees.
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Receivership is not always about the bank having its own way. The speed and powers of a receiver are invaluable in saving viable parts of the business from the losses elsewhere."
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