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Restructure & Refinance of Wholesaler

December 2011

Our client was a wholesaler and had been hit with 3 sizeable bad debts. As a result they had cashflow issues and were struggling to pay their main suppliers. In addition they had PAYE arrears.

We were able to work with the client and an insolvency practitioner to protect the actual business. The client entered into a prepackaged sale and administration. This meant that the assets of the company were sold to a new limited company set up by the same directors. The sale proceeds of the assets were used to make final payments to the creditors of the company.

The new company had the same employees and same customers but was free of the burdens caused by the bad debts.

By restructuring we were able to put the in place the following:

  • A confidential invoice discounting facility to fund cash flow. This type of cash flow finance releases up to 90% of the invoice value the day after the invoice is raised. Funding the ongoing cash flow of the new business was key to this restructuring.
  • Credit Insurance to protect against bad debts. This ensured that the business did not become the victim of bad debts again.

If your business has PAYE arrears, VAT arrears or cannot meet the terms of a demanding supplier then it is important you seek advice to protect your business. By being pro active and addressing the situation you will ensure that you are the one making decisions.

Funding Solutions is well placed to advise on this type of transaction and to arrange the most suitable form of cash flow finance for the new entity going forward.