I agree fully that 6.4% of successful re-structures is far from acceptable. Unfortunately banks are in the position whereby they have no choice but to protect their interests in a distressed situation because the value of any business dissipates very quickly as soon as any incident of insolvency occurs – customers change supplier, suppliers stop supply, staff walk out etc etc.
In the course of our re-finance dealings we have structured the re-financing of companies that are facing difficulty leveraging off a quality insolvency practitioner’s opinion that a DOCA will with reasonable expectation get approved.
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By this statement being issued we have structured finance to take out the existing lender PRIOR to administration (thereby removing the banks’ ability to appoint a receiver) enabling the company (planning to re-structure) to trade into the administration and then into the DOCA and to continue to trade when the DOCA has been approved. It’s a lot of work but it can be done and we have lenders who will support this style of re-structure.
Using this structure the fundamental underlying business can be saved to enable a formalised turnaround to happen. Providing we can establish from a technical perspective that the security of the incoming lender is protected satisfactory the chances of a re-structure can increase.