A voluntary administration success story

A large engineering company recorded losses of $22.7m over 5 years before approaching Rapsey Griffiths for assistance.

INDUSTRY

Mining

BACKGROUND

Rapsey Griffith was appointed Joint and Several Administrators of a large engineering company. A subsidiary of an international mining services business, the Company formerly dealt in the manufacture, repair, hire and overhaul of specialist underground mining equipment. The Company had operations in both NSW and QLD and sold equipment throughout Australasia.

CORE PROBLEM

The Company had recorded operating losses in excess of $22.7m in the 5 year period prior to approaching Rapsey Griffiths for assistance. Losses appeared to have been funded via loans from its Parent Group. Facing a downturn in the cyclical mining services industry and the withdrawal of support from its Parent Group, the Company was unable to meet its debts as and when they fell due.

THE SOLUTION

Rapsey Griffiths recommended the Company be placed into Voluntary Administration. In collaboration with management, staff, secured creditors, customers and suppliers, Rapsey Griffiths:

  Continued to trade the business while undertaking an Expressions of Interest (EOI) process for the sale of the business

  Identified potential sale/merger/restructure opportunities

  Determined that accepting an offer for a sale of the business would provide significant benefit to creditors compared to forced sale/auction

  Successfully negotiated a sale of the business as no deed of company arrangement was proposed, following the sale of the business the creditors resolved to liquidate the Company.

THE OUTCOME

As a result of Rapsey Griffiths appointment, we were able to achieve the following:

  Asset values were able to be maximised at 148% compared to a forced sale/auction

  The majority of the workforce retained their jobs

  The business was for the most part able to continue in existence

  Pay 100c/$ to secured creditors and employees and 93c/$ to ordinary unsecured creditors.

I would just like to thank Rapsey Griffiths for the professionalism and speed at which the process of administration and liquidation was successfully concluded. The result was a sale of the company in a very short time and a very good result for all creditors with a very high return on the outstanding debt to the stake holders. Former Company CEO