Tony Groom is chief executive of K2 Business
Partners, a firm of turnaround and transformation
specialists in London. He has spent 25 years investing
in and managing companies that need fundamental
change and a completely new business model.
A founder director and past president of TMA UK,
Groom is a Fellow of the European Association
of Certified Turnaround Practitioners and sits on
its standards and accreditation committee.
represent their interests. This often
follows a security review carried
out by a bank-appointed insolvency
practitioner, who is predisposed to
recommend that he be appointed
as administrator or receiver.
However, since 2008 there has been a
lighter touch by the banks as secured
creditors and by HMRC in UK. This
forbearance may relate to the realization
by the banks and tax authorities that
they stand to lose far more money in
an insolvency process than they do by
taking a firm but supportive approach.
Another factor was the availability
of unencumbered assets for paying
creditors or, more cynically, professional
fees. Nowadays company assets are
more often subject to security in favor
of a lender under a registered charge
or specific pledge, or are owned by
suppliers under a reservation of title.
The lack of available assets has made
it harder for unsecured creditors to
recover debts owed to them in that the
cost of collection is often not recovered,
let alone the actual debts owed.
Support for consensual restructuring
is helped by the realization by creditors
that they are more likely to get nothing
if they press for immediate payment
than if they are willing to be patient over
a longer period and to cooperate with
efforts to restructure a company so it can
repay liabilities out of future trading.
Using a restructuring expert in
a consensual restructure can
therefore result in advantages for
all parties involved, compared to
a court-appointed manager or
insolvency practitioner, who both
tend to have a mandate to sell the
assets and liquidate the liabilities.
While the outcome of a consensual
restructuring is less certain than
formal insolvency, the results should
benefit everyone concerned, provided
that everyone is realistic about the
business, that management and
staff are prepared to accept change,
and that everyone works together,
then. Consensual restructuring
ought to save more jobs, avoid
crystallizing contingent liabilities,
deliver better returns to creditors,
and generally be better for society as
a whole than formal insolvency. J
800-560-loeb (5632) 773-548-4131
loebequipment.com loebwinternitz.com loebappraisal.com loebtermsolutions.com
the loeb t. K. o.
equipment term loans
certified market appraisals
offlease equipment solutions
Your trusted resource for equipment
solutions for 135 Years