Case Study

Sale secures jobs and repays creditor

FRP was brought in to review Geneva Health International Ltd, and subsequently find the right buyer

Published: 14 June 2019

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Written by:

Chris Stevens

Consultant

Restructuring Advisory Brighton

Chris O’Brien

Senior Manager

Restructuring Advisory Brighton

Background

Healthcare recruitment specialists Geneva Health International Ltd had been experiencing issues with its invoice discounting facility.

Following an audit by the secured lender, a number of queries were raised regarding various disputed debts. This led to the need for overpayments to be made to ensure wages could be paid. Because of the way the facility had been operated the company had experienced cashflow issues, which led to a build up of unsecured creditors, and in particular a substantial debt of approximately £260,000 to HMRC.

Action

FRP was initially engaged to carry out a short business review of the company’s financial position and its ability to continue trading. The report flagged the need for a substantial cash injection, which was not available at the time. Additional options were considered, and a recommendation was provided to run an accelerated sales process and ultimately place the company into administration.

A valuation of the business was obtained and FRP then ran an open marketing campaign to secure a buyer. Some 14 interested parties signed non-disclosure agreements to access the data room, and three formal offers were received for the business.

These were discussed with the major stakeholders, and one offer was accepted subject to contract. Negotiations for the sale of the business took place over the Christmas and New Year period, and a sale was subsequently completed in early January.

Outcome

The sale of the business ensured that all staff contracts transferred to the purchaser. The realisations in relation to the debtor ledger were substantially enhanced by the continuity of the business, which in turn ensured a better return to the secured creditor who was repaid in full – including all termination fees and associated costs – in the sum of approximately £650,000.

The company was then moved to liquidation and a dividend paid to the unsecured creditors, which wouldn’t have been available if the business had not been sold as a going concern. The sale value of the business was approximately three times the going concern value that had been placed on the business by the agents.