Background

The company was a non-trading holding company for a high-profile fashion retail group, which had run out of working capital. That had led to supplier stoppages and restrictions on the group’s ability to trade, with significant arrears due to HMRC.

The principal reason for the cash shortages was its financial support of an associated company. FRP was instructed to carry out an urgent financial review of the group, which established it was insolvent. We were then appointed as joint administrators.

Action

The sole asset of the company was its shareholding in its trading companies, which were valued through an analysis of the underlying trading entities, their profitability and asset base. This brought together a number of skill sets from FRP’s restructuring team. These skills were coupled with an agent asset valuation to provide maximum confidence in the value produced.

Following this the joint administrators carried out an accelerated sale process in accordance with Statement of Insolvency Practice (SIP) 16 guidance, which resulted in the sale of the shares in the group.

Outcome

The group was able to recapitalise and continue to trade uninterrupted, achieving a better outcome than was initially anticipated by the secured lender.