Business recovery for engineering company

An engineering company, with a £20m annual turnover, was experiencing difficulties as a result of the shrinking market for its core products.

Although the company was working hard to diversify and supply alternative products, the skills and equipment needed for these new activities required new capital to replace unusable machinery and to re-train the employees to give them the new skills they required.

After much advice and consideration, it was eventually concluded that the only way to deal with the changing circumstances was to use the Insolvency process to restructure the finances of the business.

Without this it would not have been possible for the company to make the workforce redundancies that were needed due to the considerable costs involved.

The company was placed into Administration and the workforce was made redundant.

Arrangements were then made for the Newco to acquire those particular assets which were relevant for the company's new activities and to fulfil their existing orders.

A package of refinancing was arranged to purchase these assets and the goodwill of the company, with completion taking place within two weeks of the Administrator being appointed.

Asset based lenders provided £1.4m and the management team provided £240,000. A new viable business was created with a turnover of £10m, forecast to rise to £20m within three years, and 100 jobs were saved.