Mitchell Dryers

We were introduced to the board of directors in early September 2016. The company was suffering from a severe down turn in trade which was coupled with a historic and substantial funding shortfall of its defined benefit pension scheme. 

The directors had been aware of these issues and were taking advice from their existing accountants regarding their duties and the options for the company over the previous six months. 

During this time they had sought alternative investment in the company and explored the possibility of selling the business as a going concern. However, due to the millstone of the pension deficit their efforts had proved unsuccessful and at the point of our introduction the directors were only in discussion with one party who had made their position clear - they were only interested in acquiring the business via a Pre-Pack Administration process.

The directors filed a Notice of Intention to appoint an Administration in mid September which gave them a statutory moratorium; a 10 day period of protection from its creditors.

During this period we, with the assistance of our Corporate Finance team, marketed the business for sale and continued negotiations with the existing and all new potential purchases. 

Unfortunately we were unable to agree a sale during the moratorium and decided to continue to trade the business after the company was formally placed into Administration on 21 September 2016.

This strategy allowed us to preserve the value of the remaining goodwill in the company whilst allowing us the time to maximise tangible asset realisations. 

It took us a further three weeks post Administration to whittle down the interested parties and agree a carve out of the intangible assets of the company together with a limited amount of fixed assets. 

We successfully used the company administration process to:

• Secure the future of the historic Mitchell Dryers name and trade 
• With the assistance of purchaser, safeguard the future of a number of employees in the local area
• Maximise asset realisation and deliver demonstrable value for the creditors of the company

Insolvency is normally a process that creates dissatisfaction, and occasionally anger, from company creditors however our proposals and fee request received unanimous approval from all creditors who returned their voting forms, which we considered to be a ringing endorsement of the work that we have done.

Whilst it is never a nice process and creditors almost always suffer a level of bad debt following an Insolvency, we are usually best placed to use our skills and experience, in conjunction with the various options available to a company in financial distress, to make the best of a bad situation.