11.05 - 11.45 pm
Using Administrations and the Pre-pack
process to protect businesses
Steve Stokes
Partner, FRP Advisory
www.ifa.org.uk
Administration – Protecting
businesses and preserving value
Steve Stokes
Partner
Tel: 0121 710 1682 or 07764 989 009
Email: steve.stokes@frpadvisory.com
Contents
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Introduction
Administration
Pre-packs
Case studies
What we are seeing
Key messages
Questions
Introduction
FRP Advisory LLP
 FRP has nine offices and employs over 200 staff nationally
 They offer services to businesses and individuals who are facing
financial or operational uncertainty
Steve Stokes
 Steve is a partner in FRP’s Birmingham office
 He has over 14 years experience of advising lenders and directors on
corporate restructuring and insolvency matters across all sectors
 Steve has forged strong relationships with both the regional banking
community and a variety of intermediaries including accountants and
lawyers, providing both them and their clients with a solutions driven
approach to the issues being faced
Administration
 The rescue culture
 Preserve value
... preserve your client base !
Administration
 Available to:
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Limited Companies
Public Limited Companies
Limited Liability Partnerships
Partnership
 Entity needs to be, or likely to become INSOLVENT
 Main alternative insolvency options are Company
Voluntary Arrangement or Creditors Voluntary
Liquidation
Administration
 Application filed in Court gives moratorium
 Application made by:
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Company
Directors
Creditors
Holders of a floating charge
Administration
 The Administrator must try to achieve the following
objectives:
rescuing the company; if not
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achieving a better result for the company’s creditors
than if the Company were wound up; if not
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realising assets to make a distribution to the secured
creditors
Administration
Pre-packs
So what is a pre-pack ?
Pre-packs
 A pre-pack: achieves a sale of the business as a going concern,
however, negotiations for the sale take place prior to
Administration
 protects goodwill of the business
 minimises professional costs
 removes the Administrators’ ‘Day One’ issues, such as
o working capital
o landlords
o employees
o ransom creditors
o stock
Pre-packs
 BUT
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lack of transparency
directors buying back on the cheap
perception issues around ‘best value’
no creditors meeting
Pre-packs
Giving pre-packs a bad name
 Press
 Government
 Aggrieved creditors
and
……Insolvency Practitioners!
Pre-packs
 preserve the good
 remove the bad
 create a viable opportunity
Case Study 1 – Pre pack Administration
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Recruitment business
Two directors left business
Large HMRC debt remained
Poor advice from alternative advisor
Correct advice……. but not without risks!
Accelerated sale process – engaging with HMRC
Successful sale
Unsecured dividend to creditors
Case Study 2 – Trading Administration
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Local garage and body shop
Turnover £750k
Poor performing body shop function
Needed restructuring – could not afford to!
Time to pay agreement
HMRC pressure
Administration – protecting assets
Short trading period allowed restructuring
Trading successfully following sale
What we are seeing
As growth increases…
 cash flow pressures
 increase in asset values
 continued difficulty getting funding
……more insolvencies
What we are seeing
Sectors having difficulties
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Haulage
Retail
Print
Professional practices
However…
Key Messages
 Preserving value….preserving your client base
 Early intervention
 Restructuring and insolvency can be a positive
solution!
Questions
www.frpadvisory.com