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Restructuring and Turnarounds using formal insolvency procedures
Powerhouse – Administrative Receivers
Our client, Powerplan (an insurance company), had lent Powerhouse funds under a second charge. Powerhouse was a large electrical goods retailer with a turnover of £300m, but had a long history of marginal financial performance and profitability.
Very shortly after the second charge was created, the business lost its credit insurance rating meaning that trade creditors would not continue to supply goods to Powerplan (as they would no longer have credit insurance cover).
This created a domino effect – and the first charge holder appointed an Administrative Receiver to recover its funds, which had only been lent a few weeks before.
As a consequence, TMP acted as Administrative Receivers for the second charge holders. What made this job complex was that the charges were created in very complex circumstances, meaning that to a certain extent the charge holders where competing with each other (via their appointed receivers) and with the general body of creditors.
Our challenge was to find out exactly what went on (which was difficult in itself) and then to protect clients rights to ensure that they enjoyed a full recovery.
After a difficult time, we recovered 100% our client’s funds and the business was sold to an independent third party.