business recovery and reconstruction we think “solve”, not “insolvency”
Did you know? • In 2012 the UK insolvency industry was responsible for saving three quarters of a million jobs in companies going through an insolvency process • The word bankruptcy derives from ‘banca rota’ meaning broken bench, the fate befalling any Medieval Italian merchant who could not pay his debts • In over 25% of cases involving corporate failure the company’s business is saved through the use of a rescue procedure.
“Companies want sound practical advice on their business operations and how to avoid running into difficulties. Even if those difficulties are inevitable, there is always an exit route; you are not automatically doomed. In fact, many businesses can come back even stronger from the reorganisation process� Vernon Dennis, Partner and Head of Business Recovery and Reconstruction, Howard Kennedy
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Evolving to survive Despite almost 15,000 businesses winding down in 2013, the encouraging news is that insolvencies are at their lowest rate since the global financial crisis took hold in 2008. Indeed, even at the peak of the recession, the rates were well below the 20,000-plus annual insolvencies we saw between 1991 and 1993 (the worst year on record is 1992, with 24,425 insolvencies). These statistics may not be of much comfort for businesses currently facing economic challenges but the data highlights the genuine desire – and capability – to prevent companies going under. Businesses can prepare and adapt in difficult times and not just resign themselves to the inevitable. After all, creditors rarely want to see a business fail. They want to see a business succeed and will support its efforts to do so. There are countless reasons that can affect a business’ performance, from poor decisionmaking to cash-flow problems and from a lack of finance to a drop in volume of sales. In such situations, you must not put your head in the sand. You need to embrace reorganisation. A company can benefit from a refresh of its business model, both in terms of strategy and profitability, and emerge even stronger. There are always options available, refinancing, reorganisation, restructuring, selling assets. Insolvency is not unavoidable.
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Our services Our team represents clients, ranging from companies, directors, individuals, insolvency practitioners, other lawyers and intermediaries, on substantial insolvency issues and disputes within the UK and internationally. The team draws on experts from across the firm, including corporate, real estate, litigation, employment and tax advisors.
If problems do continue, we will act with sensitivity and professionalism in finding the best solution for you. This covers litigation, disputes and claims, voluntary arrangements and directors’ duties and disqualification.
We aim to establish an effective framework to protect your interests from the earliest signs of potential problems. These include external factors, such as transferring or changing of suppliers, renegotiating the terms and conditions of contracts, reviewing and obtaining finance or refinancing options, as well as internal processes, like management, employment, liabilities and tax.
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Market insight “ A major concern for the UK economy are so called zombie companies; failing businesses that have been able to survive due to benign creditor inaction and historically low interest rates. As the economy recovers these debt saddled businesses will face tremendous pressure; they will struggle to meet increased demand due to lack of available working capital and as interest rates increase creditors will undoubtedly get tougher.” Vernon Dennis, Partner and Head of Business Recovery and Reconstruction, Howard Kennedy
Recent work • A cting for the majority stakeholders of a distressed specialist retailer operating from 14 warehouse stores in the South East in the purchase of its business and assets from an administrator and the TUPE transfer of all staff • C ommencing proceedings on behalf of the Liquidator of a UK company acting as a global sales agent for world renowned manufacturer of luxury goods, and controlled through an off shore structure, in respect of multi-million pound claim for losses caused to sub-agents who had traded with the manufacturer before its demise
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• A dvising on the restructuring and subsequent disposal of the business, assets and properties of a group of insolvent care home companies to a variety of different operators • A cting for a liquidator in pursuit of professional advisors after a company in liquidation suffered a multi-million pound fraud.
Key contacts
Case studies Warner Estates: Acting for the administrators and liquidator (CCW Recovery Solutions) of 8 Warner Estates Plc group companies in the restructuring of the half billion pound property investment portfolio (over 3000 multi-let industrial units comprising of 14.6m sq ft) which saw the transfer of its asset management arm through a pre-pack sale. Brompton Hotels: Acting for the owners of a chain of 8 hotels where the leaseholder Brompton Hotels went into administration following the manager of the hotels, Brook Hotels transferring its operating business to a company, which was unapproved by the client. Liaising with the administrators (UHY Hacker Young) to ensure that the business and assets of Brompton/Brook were transferred to an operator elected by the client. Dickens World: Acting for a syndicate of investors in the restructuring and disposal of its investment in the Chatham Maritime Development, comprising of a cinema complex, restaurants and the Dickens World tourist attraction. Liaising with Liquidators (Mazars) in regards to the insolvent tourist attraction. Prince Sports: Acting for the administrators (Pitman Cohen) of Prince Sports Europe, a leading racquet sports retailer in the restructuring of its European business. The pan-European case involved coordination of legal processes as they affected the workforce across six jurisdictions.
Vernon Dennis Partner, Partner and Head of Business Recovery and Reconstruction vernon.dennis@howardkennedy.com +44 (0) 20 3755 5430 Tim Bignell Partner, Dispute Resolution tim.bignell@howardkennedy.com +44 (0) 20 3755 5383 Key Clients Baker Tilly Begbies Traynor BDO BM Advisory CCW Recovery Solutions LLP Die Sparkasse in Bremen Gordon Partners Grant Thornton Kingston Smith & Partners KPMG Leigh Adams Mazars Mercer & Hole Pitman Cohen Santander UK Plc (Abbey)
“Vernon Dennis, whose team at Howard Kennedy ‘punches above its weight’ and is particularly active in the real estate sector.” Legal 500 2014
No.1 London Bridge London SE1 9BG DX 144370 Southwark 4 Tel: +44 (0)20 3755 6000 Fax: +44 (0)20 3650 7000 www.howardkennedy.com