The client
Our client, a car dealership based in Surrey, stocked MG and Hyundai motor vehicles. It was a once successful family business which proudly provided its services to loyal customers in and around the Surrey and South London area since 1929. The garage provided car servicing and repair facilities and sold new and used vehicles having held the Hyundai franchise since 1995.
Unfortunately, bad debt and payment delays caused cash flow problems which meant it fell behind with creditor payments. The main stockist, whose debt was significant, attended the garage unannounced and began removing its stock without warning. The business subsequently failed as a result.
What we did
The insolvency team considered the main asset of the company to be its leasehold premises. It was therefore reasoned that this asset would be lost to the landlord if the company went into Creditors Voluntary Liquidation due to the lease automatically terminating. It was agreed that the most appropriate insolvency procedure for the protection of this specific asset and the preservation of goodwill would be administration.
Early communication with the landlord resulted in the discovery of a common wish to dispose of the property. The premises were marketed for sale by the administrators and their agents resulting in several offers being received prior to the deadline, including one from a high profile express supermarket chain.
The outcome
Ultimately, the landlord and the administrator agreed on the best offer received for their respective interests in the property. The sale price was apportioned between the landlord and the administrators providing the following successful outcomes:
- Sale agreed for both the landlord and the administrators and the consideration collected
- First secured lender repaid in full
- Partial repayment to second secured lender creditor
- Potential dividend to preferential creditors
Independent valuation agents advised that if it were not for the administrator’s early liaison with the landlord and the subsequent joint marketing initiative, a significantly lower value would have been achieved for the creditors.
