Restructure during COVID-19
The Company operated a retail and commercial printing business which had operated for over 30 years and had in excess of 50 staff. During the start of the COVID-19 pandemic, The Company experienced a 75% reduction in revenue which necessitated our appointment as Administrators in May 2020 with a view towards restructuring the Company’s balance sheet or selling the business as a going concern.
Australian retail and commercial printing business
Dividend to employees
- The continuing deterioration of revenue during the pandemic.
- Poor cash flow due to the reduced revenue.
- The evolving legislation regarding JobKeeper and commercial tenancy relief including the extension from September 2020 to March 2021.
- The overhead structure of the business.
- Multiple equipment financiers and difficulties with the landlord.
- Attempting to retain as much of the workforce as possible.
- Major secured creditor had inadvertently released its security over the Company’s assets.
- Urgent cash flow analysis to ensure that the business was viable in the short term as well as continually updating forecasts in order to ensure long term viability.
- Working with staff and directors to alter working hours in order to maximise employment.
- Negotiating with financiers and the landlord for waiving and deferral of payments in line with legislation.
- Advertising the business and assets for sale as a going concern and liaising with interested parties.
- After the extension of the JobKeeper scheme and other relief legislation, implementing a holding Deed of Company Arrangement (“DOCA”) which allowed the continued trading of the business whilst having access to the government incentives.
- Traded the business during the Administration and DOCA period at a significant profit due to the management of cash flow and negotiations with relevant stakeholders.
- Preparing forecasts to provide to the major secured creditor regarding the DOCA.
- Working with the director to facilitate a more permanent DOCA that would see a restructure of the Company’s balance sheet, all priority creditors paid in full, a dividend to unsecured creditors and the business continuing into the future.
Creditors resolved to accept the DOCA and the Company is now continuing to trade in line with the forecasts that were prepared during the DOCA period. The majority of the workforce have been retained and the Company has been handed back to the director.