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The Business Journey

Event No.5

7 May 2014

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The Business Journey Partners

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Allan McLeod

mlmhere to calm the waters

mlm here to help

calm the waters

RestructureSolutions for businesses facing distress

Allan McLeod

mlm Solutions

TITLE

UK Debt

“At the end of March 2014, Public sector net debt was

£1,268.7 billion

equivalent to 75.8% of GDP.” – Office for National Statistics

July 2013

TITLE

The Scottish SME market

FSB Scottish Members Survey Nov 2013 –

• 47% of members borrow to ensure cashflow

• 37% of those members borrowed less than £5,000

• Whilst 67% of those members borrowed more than £5,000

Scottish corporate failures remain static at around 1,400 insolvencies per year.

Rise of the “Zombie” business. Definition - businesses which are burdened by heavy

debts, generating just enough revenue to pay down interest but usually with no

realistic hope of getting themselves into the black let alone making a profit.

In summary, debt continues to be a significant challenge within our community.

TITLEReshape Reschedule Restructure

Insolvency Tools

Our approach

“To provide a solutions based approach to financial distress,

using the wide and varied tools within our armoury.”

- mlm Solutions

TITLE

case study - Project Foil

Profile Long est. Ayrshire family business started by Director’s father. T/o

£200k. Strong customer profile.

Issues Debt of £60k, £20k personal guarantee, no profit, director’s salary

£400pm. Tight cost control.

Solution Reshape the business.

Focus on sales strategy. Intro to Business Coach to focus on sales.

Outcome Business has now return to profitability and is reducing the debt

burden. Director taking a salary. Long est business survives,

employees continue, creditors will be paid in full and have continuity

of future supply, trading & professional relationships continue.

TITLE

case study – Project First

Profile Rural hotel operated by Partnership. Partnership consisted of 4

family members. T/o £600k.

Issues The 2 local competitors had closed in recent times. Historical debt of

£200k, including a demand from HMRC for £100k. Partners joint &

severally liable, and all facing bankruptcy. £250k equity in hotel.

Solution Reschedule the debt using Business DAS over 8 years.

Outcome Creditors to be repaid 90% of debt, compared to nil if bankrupt.

Equity in property protected.

Hotel continues to trade profitably.

All 4 partners protected from bankruptcy.

Trading & professional relationships continue.

TITLE

case study – Steel Engineering Ltd

Profile Manufacturer est. in 1922 specialising in large scale fabrication for

the Marine & Energy sectors. T/o £10m, 100 employees. Blue chip

customer base.

Issues Board changes in 2012 led to change in strategic focus to

renewables market. Substantial investment in equipment for

renewables market, large cost overruns on key projects. This led to

a rapid and severe downturn during 2013. Unsecured debt grew to

£4.4m, which the Company was unable to service, creating severe

creditor pressure.

TITLE

case study – Steel Engineering Ltd

(cont’d)

Solution Restructure the business -

1. Board level changes 2. Reduction of workforce

3. Re-focus on traditional markets 4. Reduce occupational costs

5. Return financed equipment 6. Compromise debt via CVA

7. Implementation of key KPIs

Outcome Work pipeline was rebuilt and the business now at full capacity

Workforce reduced to 60 employees

Creditors agreed to CVA , which will return 65p in £

Compares to 2p from Administration or Liquidation

Best outcome for Landlord

Continuity of trading and professional relationships

TITLEReshape Reschedule Restructure

Insolvency Tools

Our approach

Key messages –

• If it’s broke, fix it !!!!

• There is a wide range of tools at our disposal.

• Timing is critical, the sooner tackled, the better the result.

• Use your network. It’s your greatest free resource.

mlmhere to calm the waters

mlm here to help

calm the waters

www.mlmsolutions.co.uk

Allan McLeod

07500 373715

amcleod@mlmsolutions.co.uk

@TheBusJourney #SMEJourney

Questions for Allan?

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The Business Journey Partners