Restructuring & Insolvency
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Restructuring & Insolvency
Welcome We have a leading reputation for helping regional small to medium sized companies and owner managed business through the good times as well as the bad times. However, more recently, clients have come to us with a whole manner of different legal and commercial issues which require specialist input from a number of lawyers across our firm. The common denominator in these scenarios is the current state of the economy and the financial distress this causes. This creates the need for fast, proactive advice to manage the situation and key stakeholders in order to conclude a successful outcome for the business. We have responded to these special, and often difficult, conditions by forming the Restructuring & Insolvency Team. This comprises industry experts who are experienced in working with business owners, directors and other professional services to address short term issues or longer term chronic trading difficulties. Our objective is to respond quickly by taking control of situations and managing them to a successful outcome for our clients. We resolve difficulties by working with people involved in any of the following situations. Stakeholder management: n banking and venture capital firm relationships; n creditors; n employees and trade unions; n refinancing; and n restructuring secured debt. Situation management: n restructuring and reorganising businesses; n resolving disputes; and n formal insolvency scenarios. Distressed asset investments: n buying struggling businesses; n creating investment opportunities; and n working with specialist turnaround investors. We combine our expertise to provide swift and practical solutions to each situation.
There are varied and numerous factors which influence the severity of the situations that require our specialist advice. We treat each situation individually by addressing its unique issues with pragmatic and commercial solutions. The ways that we can help are diverse and there are many instances when clients are clear that they have a problem, but are unsure of any solution. Too many businesses which go into formal insolvency could have avoided their fate had they sought financial or restructuring solutions earlier. This is why we are always more than willing to have an initial discussion without charging for our time. Not seeking financial or restructuring help early can restrict your options later on when creditor pressure increases. Here are some more ways that we can help: Banking Relationships n reviewing bank facility letters and mortgage documentation to understand the value of the security the Bank holds and the implications of any breaches of banking covenant; n using our extensive network of contacts to source finance opportunities (including invoice discounting and asset based lending/lease finance as well as more opportunities to move your clearing bank account); and n quickly producing legal mortgage/debenture security on behalf of creditors who are concerned about a particular level of customer risk and consider the insolvency law implications of taking security at this stage. Restructuring and reorganisations n balance sheet restructuring; n share sales of solvent (but financially stressed and distressed) businesses; n dealing with the investment requirements of incoming investors; n seeking Turnaround Finance and working with distressed funds/accelerated mergers and acquisitions advisers to achieve a business sale of stressed and distressed businesses; and n acting for buyers in the context of a pre-packaged administration sale. Resolving disputes n debt recovery services for Insolvency Practitioners including bespoke recovery of construction debt ledgers; n bankruptcy and insolvency litigation service; n links to litigation funders and After The Event insurers to successfully pursue insolvency litigation; and n unique monitoring services of our clients’ debtor customers using a real-time online alert system to inform them of problems in their customer base.
Managing employees and trade unions n offering our employment protection insurance, Mi Shield, providing a combination of our employment services for an all inclusive fixed cost, which includes tribunal costs and awards; and n TUPE advice and the implementation of consultation/redundancy schemes. Property investments n dedicated specialists to deal with insolvency related disposals of property assets for insolvency practitioners; n introducing cash rich clients looking for opportunities to buy distressed property assets; n services such as security reviews of property security for banks and other lenders; and n insolvency advice and training to commercial landlords in relation to their insolvent tenants. Insolvency and turnaround situations n advice for Insolvency Practitioners in relation to all aspects of formal insolvency situations; n acting for administrators in the sale of businesses and assets through pre-pack administration procedure and sale through trading administrations; n advice for boards of directors on directors’ duties during periods of financial distress to avoid personal liability; n advice in relation to supply chain insolvency; n working with an extensive network of trusted partners to provide and implement informal turnaround solutions (i.e. interim Financial Directors, turnaround practitioners, distressed funds, corporate financiers, insolvency practitioners, bank advisory teams). We will do whatever it takes to avoid insolvency wherever possible, although it might ultimately be the casethat turnaround is only achievable by using an administration, for example; and n overall high level reorganisation and restructuring advice focussing on restoring the balance sheet to an acceptable and stable position (divesting non-core and unprofitable assets, refinancing to leverage assets, negotiating with lenders, realising property by way of sale and leaseback, accessing pension fund cash, etc.).
Case Studies
The rescue and community ownership restructure Saving jobs and business investments
of Darlington Football Club
We were approached by an entrepreneurial investor who
On 3 May 2012, approximately 5 months after our initial had injected over £1m of funds into a manufacturing
involvement started, we successfully rescued the club out business secured by a debenture which pre-dated the
of administration by completing a deal to purchase the Enterprise Act 2002. The business had consistently
entire business assets of the football club ensuring its traded poorly and there was a call for further cash from the
continuation as a going concern. investor to stabilise cash flow. The investor was unwilling
to compound his losses and wished to unwind his position.
The Buyer deployed an innovative fund-raising scheme
utilising crowd-funding as an opportunity the local We were able to quickly implement an appointment of an
community of Darlington to raise funds of circa. £300,000 administrative receiver who sold the business under a pre-
in approximately 14 days. We also developed an entirely pack receivership sale to a local competitor. This resulted
bespoke concept of using a community interest company in nearly all of the employees’ jobs being saved and a
to work in parallel with the football club to deliver maximum mechanism being implemented to enable our client to have
community impact with amendments to articles of a significant element of his investment repaid through the
association to ensure a 15% ownership cap on the share realisation of assets.
capital.
Understanding the Banks – supporting your future
This was a complex case with many stakeholders involved,
including the former Chairman of the football club, the An organisation’s UK Bankers were concerned that
administrators, the town MP, the leader of the council, the planned restructuring activities of the company’s overseas
editor of the local newspaper, key representatives from the parent would have a detrimental impact on the UK Bank’s
various fan-groups, the football association and others. position.
By getting involved early on in the rescue we were able to By evaluating the proposed activities we advised the
deliver significant results for our client. company of the Bank’s perceived issues and thereby
helped to alleviate those concerns. This enabled the Bank
Retaining value when in administration to agree to the restructuring plan. This secured support
from the Bank and ultimately the company’s ongoing
Powerdial Services was a very well managed business,
position.
with a first class client base and an excellent reputation
in the UK IT Sector. However they were faced with some
complex business issues. The parent company (ISD
Acquisition results in growth for Express Engineering
Group Plc) had gone into administration. We needed to
act rapidly to support a rescue scenario involving a sale of Our quick response to local firm, Express Engineering, on
the business and assets, as well as shares of Powerdial the acquisition of the North Yorkshire precision components
Services. It was vital Powerdial remained intact. firm, Burdon Limited (which went into administration in
There were overseas investors involved which added a August 2013) helped save over 70 jobs and increase
significant layer of complexity to the deal. We needed their Express’ capacity.
finances to facilitate the transaction and there were some The acquisition formed a key part of Express’ growth plans.
difficult negotiation points which we had to address. This was an important transaction which allowed Express
To protect the business we established new bank security to take on the 76 strong, skilled workforce and acquire
covenants. Stepped in to stop staff from the subsidiary the manufacturing equipment at the Stokesley Industrial
who had left the business, trying to take customers with Estate Factory. This included a virtually completed,
them. By protecting the ongoing trade of the business, freehold 25,000 sq. ft factory which Express intended to
we secured a future for the remaining staff and avoided finish to accommodate further expansion of the Stokesley
letting its customers down. As a result, our team ensured operations. The assets acquired were vital to enabling
a co-ordinated approach was made to tackle the issues Express to expand services and reduce lead times to
that Powerdial Services faced and we brought about a existing Express customers.
successful conclusion. It was therefore important to secure the deal and agree
the sale terms as quickly as possible to ensure that the
opportunity was not lost. We worked with Express and
its financial advisers pwc over an intense few days. We
were able to achieve a swift agreement with Burdon’s
administrators within the very short time frame that was
dictated by Burdon’s cash flow position.What our clients say about us
Our team are “recognised for expertise in corporate restructuring
advice. Particular focus on advising directors whose businesses are facing
financial difficulties.” Our industry knowledge is described as “Absolutely
brilliant, they can handle it when projects get complicated and they impress
on technical details.
Chambers and Partners 2014
Whenever I met with Muckle LLP it was like meeting with businessmen
who happened to also be lawyers. They understood the business’ needs. In
my dealings with Muckle, I found them to be a vibrant, professional team. The
team at Muckle – and it was very much a team – is outstanding. From start to
finish, everyone I worked with was professional and dedicated and delivered
on what they said they would. They were excellent every step of the way.
Paul Farn, Managing Director of Powerdial Services LimitedI am delighted to see that Muckle LLP has launched its Restructuring & Insolvency Team which aims to provide North East based companies with innovative business rescue and turnaround solutions. It is important that organisations operating in the turnaround community work together to drive value for all stakeholders from distressed situations. Through a combination of being proactive in identifying opportunities for turnaround investment and moving quickly to conclude deals, I am sure that the Restructuring & Insolvency Team will have a significant impact on the business rescue community for years to come. Jamie Cons table, Chief Executive Officer at Rcapital Partners LLP
Key Contact
Andrew Cawkwell
Partner and Head of
Restructuring & Insolvency Team
Tel: 0191 211 7957
Mob: 07776 208 244
andrew.cawkwell@muckle-llp.com
@companyrescue
“He is “straight-talking and forthright and offers clear, precise
and articulate guidance,” and is “very agile in the solutions that
he provides.” Clients praise his ability to produce “straight and clear
responses” as well as his capacity to handle complex cases.
Chambers and Partners 2014
Muckle LLP
Time Central, 32 Gallowgate, Newcastle upon Tyne, NE1 4BF, DX 61011
Tel: 0191 211 7777 | Fax: 0191 211 7788 | www.muckle-llp.com
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