*Boring accounting topic warning* Company in adminstration
Discussion
Afternoon all,
A few months ago I left my job as CFO of a c£20m turnover company which was a three hour round trip per day commute to a Group FC role of a c£100m turnover company that's less than a 15 minute round trip commute. I was happy to take the step down for a better work life balance!
The group is made up of hundreds of entities so my usual due diligence ahead of accepting the role was more difficult than normal (I even mentioned in my interview that it felt like the group was deliberately confusing!) but overall the group posted a strong set of accounts.
Two weeks before I joined I was informed that a couple of the operating companies had gone into administration. I was reassured that this was a preventative measure against a spurious claim.
In the first three months another hundred or so companies within the group have gone into administration, driven by the various funding partners protecting their assets prior to the refinancing being completed. At the start of my fifth month we've literally only a handful of operating companies left not in administration and slightly less than no information coming down from board level.
I've had a very wide ranging career to date, mainly FTSE100 companies and a handful of smaller owner managed and PE backed businesses. In all my time I've never been in a company in administration. My question to the PH collective is:
Where a group is funded by a number of separate PE backers is it normal for them to place all of their assets into administration (all by separate practitioners) whilst refinancing is complete?
Morale, as you can imagine, is rock bottom in my team with a number of them stating they're hanging around purely for their "morbid fascination of what's going to happen next!"
A few months ago I left my job as CFO of a c£20m turnover company which was a three hour round trip per day commute to a Group FC role of a c£100m turnover company that's less than a 15 minute round trip commute. I was happy to take the step down for a better work life balance!
The group is made up of hundreds of entities so my usual due diligence ahead of accepting the role was more difficult than normal (I even mentioned in my interview that it felt like the group was deliberately confusing!) but overall the group posted a strong set of accounts.
Two weeks before I joined I was informed that a couple of the operating companies had gone into administration. I was reassured that this was a preventative measure against a spurious claim.
In the first three months another hundred or so companies within the group have gone into administration, driven by the various funding partners protecting their assets prior to the refinancing being completed. At the start of my fifth month we've literally only a handful of operating companies left not in administration and slightly less than no information coming down from board level.
I've had a very wide ranging career to date, mainly FTSE100 companies and a handful of smaller owner managed and PE backed businesses. In all my time I've never been in a company in administration. My question to the PH collective is:
Where a group is funded by a number of separate PE backers is it normal for them to place all of their assets into administration (all by separate practitioners) whilst refinancing is complete?
Morale, as you can imagine, is rock bottom in my team with a number of them stating they're hanging around purely for their "morbid fascination of what's going to happen next!"
Why did they have hundreds of entities?
I have seen that a few times, normally with a huge web on intercompany transactions and loans, with profits being siphoned off and residual loans/liabilities being left in a few entities which are subsequently wound up (but only after the original Directors have resigned and new Directors put in place)
I suppose what I mean is "Are there genuine operational reasons why there are so many different entities (i.e. working in different sectors, working in different regions)" or is it designed to make it very difficult for anybody chasing debts to find out where the buck stops?
I have seen that a few times, normally with a huge web on intercompany transactions and loans, with profits being siphoned off and residual loans/liabilities being left in a few entities which are subsequently wound up (but only after the original Directors have resigned and new Directors put in place)
I suppose what I mean is "Are there genuine operational reasons why there are so many different entities (i.e. working in different sectors, working in different regions)" or is it designed to make it very difficult for anybody chasing debts to find out where the buck stops?
As someone who makes a living from advising companies is distress / refinancing etc regularly for PEs and alike.
Having different administrators is odd, I'd even go so far as to say highly unusual. However do bear in mind the secured creditor for each entity normally has the final say on who is being appointed. If the group has different funders it may lead to different administrators if there are conflicts of interest.
Very unusual though.
Any more info you can give online, appreciate you may no want to be too specific.
Having different administrators is odd, I'd even go so far as to say highly unusual. However do bear in mind the secured creditor for each entity normally has the final say on who is being appointed. If the group has different funders it may lead to different administrators if there are conflicts of interest.
Very unusual though.
Any more info you can give online, appreciate you may no want to be too specific.
sleepezy said:
As someone who makes a living from advising companies is distress / refinancing etc regularly for PEs and alike.
Having different administrators is odd, I'd even go so far as to say highly unusual. However do bear in mind the secured creditor for each entity normally has the final say on who is being appointed. If the group has different funders it may lead to different administrators if there are conflicts of interest.
Very unusual though.
Any more info you can give online, appreciate you may no want to be too specific.
There's so much more that I want to say but it wouldn't take too much more to be able to identify the group in question!Having different administrators is odd, I'd even go so far as to say highly unusual. However do bear in mind the secured creditor for each entity normally has the final say on who is being appointed. If the group has different funders it may lead to different administrators if there are conflicts of interest.
Very unusual though.
Any more info you can give online, appreciate you may no want to be too specific.
There are different administrators for exactly the reason you mention, there are a number of sites that have been funded through various different funders. Each company purchased was placed into an opco with a holdco on top. Looking at the inorganic growth of the business I can (kind of) see how the groups structure has grown.
My personal view, having reviewed the state of the accounts and associated processes is that the existing funders have lost faith in management and as such have seized control of the assets. A lot of the businesses are now actively being listed for sale but the only drum being beaten by management is that the refinancing is all progressing well and it's just a matter of time before the deal is agreed and most (not all) of the sites will come back and all will be well. I simply do not believe this!
I understand, and fully agree you shouldn't be 'publishing' information.
From what you say the only way this can be resolved as management are describing is if one, or more, new investors pump in enough cash to buy out the secured creditors and fund the working cap need, losses and general hubris associated with what's happened recently. Possible, but highly improbable I'm afraid given the number of stakeholders that would need to go along with the plan. Hard to give more advice without the detail, but as above you should keep that info to yourself.
Sorry to hear you're in the middle of this, poor state of affairs to have found yourself in in afraid. It's there a role you can carve out for yourself as FD of a smaller group of the companies for a new investor? Going to be hard if you've only just joined.
From what you say the only way this can be resolved as management are describing is if one, or more, new investors pump in enough cash to buy out the secured creditors and fund the working cap need, losses and general hubris associated with what's happened recently. Possible, but highly improbable I'm afraid given the number of stakeholders that would need to go along with the plan. Hard to give more advice without the detail, but as above you should keep that info to yourself.
Sorry to hear you're in the middle of this, poor state of affairs to have found yourself in in afraid. It's there a role you can carve out for yourself as FD of a smaller group of the companies for a new investor? Going to be hard if you've only just joined.
sleepezy said:
I understand, and fully agree you shouldn't be 'publishing' information.
Sorry to hear you're in the middle of this, poor state of affairs to have found yourself in in afraid. It's there a role you can carve out for yourself as FD of a smaller group of the companies for a new investor? Going to be hard if you've only just joined.
A very good suggestion, I say this as I've already had the conversation Sorry to hear you're in the middle of this, poor state of affairs to have found yourself in in afraid. It's there a role you can carve out for yourself as FD of a smaller group of the companies for a new investor? Going to be hard if you've only just joined.
Redarress said:
Bloody hell. Great hospital pass ?? As one door closes ……… good luck
sleepezy said:
Good man 
, always remember no matter how little you know about the business the investors always know even less... 
Thanks both. Lots of things need to happen in a specific order for me to get a swing of the bat, but it's a challenge I'm up for and have history in turning failing finance functions around and with dealing with investors. Thankfully I also have prior industry knowledge in a particularly well lrun business. , always remember no matter how little you know about the business the investors always know even less... My biggest concern is whether there's a company left to turn around! I'd already been asked by HR if I'd take a temporary pay cut to ensure all staff got paid, which I was prepared to do, but my bosses refused! Thankfully it's not actually come to that, yet!
So, update for everyone today.
Company has finally collapsed. A Scottish housebuilder has bought 35 sites and has agreed to transfer "most" staff.
Sadly I didn't make the cut despite massively improving the finance function in the six months I was at the company. The new company even went as far as to thank me for leaving them with such a well rounded team and the work I did to whip them into shape.
New job hunt starts tomorrow #fml
Company has finally collapsed. A Scottish housebuilder has bought 35 sites and has agreed to transfer "most" staff.
Sadly I didn't make the cut despite massively improving the finance function in the six months I was at the company. The new company even went as far as to thank me for leaving them with such a well rounded team and the work I did to whip them into shape.
New job hunt starts tomorrow #fml
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