1. Using Administrations and the Pre-pack process to protect businesses www.ifa.org.uk Steve Stokes Partner, FRP Advisory 11.05 - 11.45 pm

2. Administration – Protecting businesses and preserving value Steve Stokes Partner Tel: 0121 710 1682 or 07764 989 009 Email: steve.stokes@frpadvisory.com

3. Contents  Introduction  Administration  Pre-packs  Case studies  What we are seeing  Key messages  Questions

4. 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

5. Administration  The rescue culture  Preserve value... preserve your client base !

6. Administration  Available to:-  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

7. Administration  Application filed in Court gives moratorium  Application made by:  Company  Directors  Creditors  Holders of a floating charge

8. Administration  The Administrator must try to achieve the following objectives:-  rescuing the company; if not  achieving a better result for the company’s creditors than if the Company were wound up; if not  realising assets to make a distribution to the secured creditors

9. Administration

10. Pre-packs So what is a pre-pack ?

11. 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

12. Pre-packs  BUT  lack of transparency  directors buying back on the cheap  perception issues around ‘best value’  no creditors meeting

13. Pre-packs Giving pre-packs a bad name  Press  Government  Aggrieved creditors and …… Insolvency Practitioners !

14. Pre-packs  preserve the good  remove the bad  create a viable opportunity

15. Case Study 1 – Pre pack Administration  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

16. Case Study 2 – Trading Administration  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

17. What we are seeing As growth increases…  cash flow pressures  increase in asset values  continued difficulty getting funding ……more insolvencies

18. What we are seeing Sectors having difficulties  Haulage  Retail  Print  Professional practices However …

19. Key Messages  Preserving value….preserving your client base  Early intervention  Restructuring and insolvency can be a positive solution!

20. Questions

21. www.frpadvisory.com