Case Study – King Limited and Spades Limited
Satisfactory two sister company business - ID facility in place but full utilisation.
Unexpected call to Lender that due to seasonal problems (sharp drop in business) cashflow had collapsed. Expected Administrator to be appointed in two weeks…
What Happened?
Initial recovery assessment undertaken – not promising on one ledger (disputes, returns, lack of continuity). Other business sold and funding recovered. Recovery strategy needed lateral thinking and quickly…possible solution identified but needed agreement of Administrator and buy in of previous owner/manager. Ledger effectively sold to the previous owner for the outstanding funding, theory being he was best placed to collect. Any surplus was to be split 60 owner/ 40 Lender, which was the carrot. Lender owned sales ledger so Administrator was convinced this was an acceptable transaction.
Lender achieved full recovery (and financed the resulting Phoenix, exiting after six months as previously agreed given previous experience).