Restructuring Advisory

Settling funding dispute leads to solvent exit

FRP resolves funding deadlock to help company exit administration

Background

The lender provided project finance for the construction of an anaerobic digestion plant, but after disagreements arose over funding, discussions between the parties broke down, leading to deadlock.

The lender initially appointed a receiver; however, this didn’t achieve the hoped-for results, so the lender applied to the court for a hearing for an administration order over the company.

The directors contested the appointment of administrators, but after hearing all the evidence the court made the order and, consequently, two FRP Partners were appointed joint administrators.

Action

The receivership terminated on administration. The anaerobic plant was operational on appointment, and remained so for the duration of the administration.

During this period the lender and the shareholders reached agreement to settle their respective claims against each other; the shareholders transferred their shares to a special purpose vehicle set up by the lender, and a strip of land which had been transferred to a third party shortly before insolvency was transferred back to the company.

Outcome

With the ownership of the business having passed to the funder, it agreed to provide funding to a third-party operator enabling the company to achieve a solvent exit from administration.

The anaerobic plant was operational on appointment, and remained so for the duration of the administration. Jason Baker Restructuring Advisory

Related team

Jason Baker

Jason Baker

  • Partner
  • Restructuring Advisory
  • London

Glyn Mummery

Glyn Mummery

  • Partner
  • Restructuring Advisory
  • Brentwood