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.
