The Courier & Advertiser (Angus and Dundee)
Opportunities to purchase companies from administration
PAMELA MUIR, INSOLVENCY, RESTRUCTURING AND CORPORATE PARTNER, THORNTONS
The coronavirus pandemic and the resultant lockdown restrictions have undoubtedly caused enormous economic and practical distress for otherwise healthy and successful businesses of all sizes.
Directors are being forced to consider the future shape of their businesses in an unprecedented way.
Many are looking at restructuring to ensure that they emerge from the pandemic as quickly and successfully as possible.
Restructuring a business which is experiencing temporary difficulties in order to ensure its survival can take many forms, from refinancing to disposing of under-performing or non-key parts.
If a business cannot be restructured or rescued and enters into administration or liquidation, it has obviously been experiencing severe financial challenges.
However, there is every chance some or all of the underlying business and assets can be sold, providing the opportunity to “rescue” a business that may supplement and scale another business.
When looking at buying a business or assets out of an insolvency process, there are many things to consider.
Some key points are:
● If doing due diligence is important in normal acquisition activity, then it is doubly so in insolvency. Taking the time to obtain independent valuations and carrying out all possible title investigation is never wasted.
Taking advice in respect of employees, intellectual property, data protection and property is essential.
Any purchase agreement entered into with an insolvent business does not provide the same level of indemnity and warranties that you would expect in solvent purchase. Doing your own due diligence is the key difference between a useful investment or a “pig in a poke”.
● Managing the relationship with key suppliers, employees and customers – who have potentially gone through a bruising time – and managing their expectations is also critical. It is important to have a detailed understanding of what obligations, if any, you may have to them.
● The legal framework under which an insolvency practitioner is able to sell any business and assets dictates much of their ability to negotiate. Transactions typically happen quickly.
Buying a business out of insolvency can be a cost-effective boost or way of entering into a new market without the usual start-up costs.
Abrownfield site in Fife is being regenerated through a mixeduse masterplan. Mansion House Group has embarked on an ambitious venture for Whitehill Industrial Estate, Glenrothes. It comprises a variety of occupied and disused buildings in varying states of repair.
Regeneration of the area through an imaginative mixed-use development incorporating homes would go a long way to breathing fresh life into a location blighted for some years by derelict industrial buildings.
Recent completion of the first phase of the redevelopment has seen a mixture of workshops which have been vacant and, in some cases, derelict for many years, all currently under offer – predominantly to local businesses.
In the second phase, a closing date has been set this month for a further batch of industrial and workshop units ranging in size from 934sq ft to 3,000sq ft.
With prices starting from £32,500, they have been popular with small firms seeking premises to own.
There are also several existing residential properties at Whitehill being retained as part of plans to redevelop the site and meet demands for new homes, while complementing wider regeneration plans in the area.
The proposal is for 199 homes, comprising 32 apartments and 167 houses.
Apartments will be built to a maximum of three storeys and the houses are to feature a mixture of one to four-bedroom properties, including affordable homes.
Mansion House Group wants to deliver a quality residential environment at Whitehill.
There will be public open space featuring play areas, while sustainable modes of travel to and from the homes will be encouraged by linking up with existing pedestrian and cyclist infrastructure and public transport routes.
Woodland areas to the north of the location will be retained, with new pathways linking the development to the woodland.
The recent development of the Inchdairnie Distillery resulted in wider regeneration of the industrial area to the south of the site.
More than £15 million has been invested into that project led by Ian Palmer, who has more than 40 years of experience in the whisky industry.