Business Rescue Home

Schemes of arrangement are undertaken without protection of the court and are more suitable to smaller companies unable to sustain the cost of seeking formal court protection. Nonetheless, they share much of their methodology with court-approved examinerships.

CREDENTIALS

Case Study: Informal Scheme of Arrangement managed by Brian McEnery

This is a classic example of a construction-related company in trouble. Delta Build, located in the midlands had been operating for nine years. It had a successful trading history with almost 50 employees and a turnover of over €10M at its height. It had a very determined director who would not allow the company go into liquidation, despite it appearing as the most practical option. Delta Build had a large claim in arbitration and did not have the cash to pay creditors. On foot of our advice the shareholders personally invested enough funds to pay creditors 20 cent per Euro. In addition, they undertook to fight the arbitration. Horwath Bastow Charleton submitted a scheme to the creditors whereby the shareholders would pay the balance due to them from the arbitration settlement and from the profits for the forthcoming five years. The creditors approved the scheme - virtually unanimously - and less than two years later the arbitration settlement was agreed. The profits from the first year of trading, after the restructuring, completely repaid the creditors. The company has had a very successful second year of trading since the scheme of arrangement was completed.

Case Study: Insolvency Workout, without Scheme of Arrangement, managed by Brian McEnery

Family Fun was a substantial manufacturing company with a turnover of almost €50M. An indigenous company with over 400 employees at the peak of production it began suffering severe cash flow difficulties surrounding the seasonal nature of its business. In addition there was a substantial amount of Revenue arrears. Our first step was to independently assess the true extent of the problem. We identified the need to introduce capital - in excess of €3m - to allow the company continue (even with a Revenue instalment arrangement). We identified management weaknesses and pressed for change in these areas. We then convinced bankers to release value from existing company assets despite high loan-to values. We also secured new equity for the company, a valuable introduction in bolstering the bank’s confidence. We agreed a fair Revenue arrangement and moved the company out of crisis over a period of six months.

While some parties close to the company knew there was a turnaround, most customers and suppliers were completely unaware of our existence. This was a reflection of its success.

BENEFITS

Schemes of arrangement offer smaller companies an avenue to trade out of financial difficulties, without imposing the extra costs of going through the court system. It is of paramount importance that your advisor has the necessary skills to assess your current situation and present a realistic and effective solution. Here at Horwath Bastow Charleton our staff have over 15 years experience in advising companies, we are experts in raising finance, devising new business strategies and business plans. Together with our Tax Department we offer a full service minimising tax exposure and ensuring compliance.

For further information please contact:

Brian McEnery
E: brianmcenery@hbcl.ie