The Challenge

An engineering company with 23 years of trading, an annual turnover of £9 million, an experienced management team, plant and machinery, and borrowings of £4.3 million, was unable to meet its debts as they fell due and was technically insolvent.

A detailed review of the company’s financial position, asset base, debtor book, and operational requirements to move forward was completed in less than 48 hours. Using our in-house restructuring lawyers and an insolvency firm on our panel of experts, we were able to establish a turnaround plan, which was executed immediately.

Our Approach

The business was placed into administration as a protection method that would, in time, be converted into a Voluntary Arrangement in order to ensure immediate protection for the business, the continuity of suppliers and retention of customers. We helped the management establish a new trading company, and within a matter of days, the existing management and workforce were trading a new Limited company.

We structured a Turnaround solution including:

• Short-term bridging finance to pay suppliers for new stock

• We purchased the freehold and mortgaged it back to the new trading company on a 25-year term

• We took out Lloyds Bank borrowings and released the directors from their personal guarantees secured against a 30% equity investment in the new Limited company

• We introduced a new line of credit and refinanced some of the plant and equipment at more favourable terms

• We helped the management by giving them additional management and operational support

The Outcome

• The cost of borrowing in the new structure was reduced by 43%

• The new Limited company was able to retain 100% of the existing clients and has enough line of credit to increase sales by a further £2.2m

• The CVA successfully returned 80% to trade creditors, and the new Limited company was able to continue to work with 93% of the existing suppliers

• With a clear structure and adequate funding, the business is on track to achieve sales of £20 million over the next couple of years

Our support and expertise enabled the management to capitalise on a time-sensitive crisis and turn the business around with a solid footing to grow

Why Sense Capital Solutions

Sense Capital Solutions specializes in providing bespoke funding and advisory solutions for businesses operating in complex, distressed, or time-sensitive situations.

By unlocking liquidity where traditional lenders cannot, we enable management teams and shareholders to focus on continuity, recovery, and growth.