A prominent mining services contractor in Western Australia was placed into voluntary administration due to directors’ concerns about insolvent trading.
The business was under severe financial pressure due to changes in market conditions following the slowdown in the resources sector in Western Australia. The main challenge was to continue operating the business whilst negotiating a sale of the business as a going concern that would preserve the value of the business and maximise the benefit to all stakeholders. The directors were also concerned about director’s guarantees they had given to preferred suppliers which left them exposed to significant personal liability if the company went into liquidation.
Through a combination of cost-cutting measures, management expertise and successful negotiations with secured creditors, we worked closely with the administrators to achieve a sale of the business and its assets through a deed of company arrangement which enabled the business to continue its existence, retain core employees, and maximise the return to unsecured creditors. The transaction also resulted in the directors of the company being released from their director’s guarantees, putting an end to many sleepless nights.