Azimuth Partners received a referral from an insolvency firm in relation to a large, multi-faceted retail business that was facing some financial difficulties. The business was heavily debt laden. The owner hadn't paid some creditors for three years and was managing to subsist on a day-to-day basis on turnover. In addition, the business was also facing some fairly significant legal action from a second mortgage on a property.
Our Goal
Build out a feasibility study for the business and identify if there is something that could be resurrected in terms of the debt position. This was because the business also had its bank about to appoint a receiver.
Our Strategy
The team built a plan, worked with the bank and with the business owner, whilst the litigation around the second mortgage was taking place. We also built a plan with the creditors to make sure they all got paid, which they ultimately all did, freeing the business from the debt.
In the background of all this, we identified an opportunity to sell a significant property which the business operated from. However, it involved some very complex and difficult negotiations because we had litigation in the background which resolved itself and also, the bank wanting to take possession of the property. So, we set the plans in place to enable us to stable that ship to allow the negotiations to take place.
Another challenge that we faced was that the business owner had a different expectation on the value of the business that was operating quite separate from the property, and he was looking for a combined sale. The issue here was that the property was being sold at an absolute premium to market even without the business, but the business owner’s insistence on an unrealistic value for his business almost derailed the whole process.
Azimuth Partners were able to assist the final negotiation phases by structuring the business sale such that the owner achieved ultimately close to his expectation, which was an absolute premium for the property. The owner was happy to achieve almost twice of what the price would be today. With that, he was able to tidy up and pay out the bank, pay out all these creditors and have a surplus of cash to move on with in life.
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