At BRI Business Recovery and Insolvency (“BRI”) we endeavour to rescue a business wherever possible rather than close it. However, there are instances when there is no alternative but to close. In this insight we talk about preparing for liquidation and give examples of our taxi repowering company.
The client company
We were introduced to this company via its funders when they were close to running out of cash. The business altered taxis to enable them to be more environmentally friendly and comply with the tighter UK emissions regulations in certain cities.
The business sought to be a leader in the fight for green powered travel and invested significant sums in their proven technology and vehicles to allow greener travel. Sadly, the further investment needed was too great as the company struggled for some time due to Covid (which essentially stopped travel) and issues with its supply chain. On top of this, there was pressure from creditors for payment. The director did attempt to save the business and return it to profitability but was unable to achieve this and was not willing to risk any further personal funds.
BRI Business Recovery and Insolvency’s remit
BRI were instructed to assist the director to close the company in preparing for liquidation. However, prior to doing so, BRI felt it important to test the market and see if a sale of the business and assets was possible.
Marketing particulars were drafted and approaches to relevant parties were made. However, there was no serious interest and no offers received. Accordingly, BRI were instructed to liquidate the company, assist the employees, maximise the asset realisations and, where possible, pay a dividend to creditors.
Initial stages in preparing for liquidation
In preparing for liquidation, it’s important that the company director make things as easy and smooth as possible.
BRI obtained a wealth of information from the company’s director in order to prepare for the liquidation. This included the preparation of a statement of affairs. This detailed the assets and liabilities of the Company together with a listing of its creditors.
Employees’ redundancy and claims
As the Company was in the process of being liquidated, the employees were to be made redundant. We guided the employees through this process and assisted them with their claims to the government for monies owed to them.
The company’s assets
The company traded from two sites in England. Due to creditor pressure and one of the leases expiring the director had to move all the assets into one premises in order to protect them.
We instructed an independent agent to value and collect the assets. Among the assets were some mechanical equipment and vehicles. The agent held an auction on site which was successful and realised over and above what the assets were originally valued at.
Creditor claims
Together with assisting creditors with their claims and any queries they had, we dealt with a number of retention of title claims. Should a creditor supply a product to a company and that product has not been paid for, if their terms of supply permit, then they can claim that product as theirs even though it has already been supplied as title (ownership) has not passed regardless of who holds the product.
Next steps and dividend to creditors
Following receipt of the auction monies, once the liquidators’ costs are agreed with creditors we should be in a position to pay a dividend to certain classes of creditors.
To be continued…
This has been an in-depth liquidation with many facets which we have undertaken. We have assisted all the stakeholders where necessary and most importantly we have realised sufficient funds from the assets to enable a dividend to be paid to creditors. The importance of the detailed preparation at the outset and getting to understand the clients situation, will often result in an improved outcome for all stakeholders and a better return to the company’s creditors.
If you know of any director that would benefit from advice on selling their distressed business or like to discuss an orderly wind down please reach out to any of the BRI management team who will be able to offer a confidential, free and without obligation meeting to discuss.