releases Deemed release: Case study BANK 1 BANK 2 BANK 3 DEBTOR PURCHASER Debt £60m Business £50m PURCHASER • Debtor company has already been in financial difficulties ; is now owned by a consortium of Banks, none of which control it Debtor’s b siness is orth £50m Banks ha e fo nd a potential P rchaser at • Debtor’s business is worth £50m ; Banks have found a potential Purchaser at this value • Banks are owed £60m by Debtor • Option 1 - Banks waive £10m of debt. Purchaser buys Debtor for £1 and procures repayment of outstanding £50m of Bank debt. • Option 2 – Purchaser buys shares and debt owed to the Banks for £50m
Insolvent group with no documented intercompany loans and only net balances known for each company: Case Study and only net balances known for each company: individual loan relationships cannot be identified Not all group companies insolvent Sale of half of group and requirement to clean up intercompany loan positions through waiver to facilitate sale Is it possible lawfully to waive the intercompany debts? debts?
Strategy and how much debt to convert? Commercial issues for lenders ► Accounting/Regulatory impact of holding equity C titi /P i i ► Competition/Pensions issues ► Board representation and conflicts for lenders ► General approach on usual shareholder and equity terms y
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