Consultancy

We are currently acting for a range of clients who are in a position where their loan covenants are in breach of their loan agreement. In most cases the breach can be attributed to the wider economy or a re-valuation and down-valuing of the client's assets. In some cases it is the lender that has been responsible for the breach.

Clients are usually introduced to us by other professionals such as Accountants or Solicitors and in some cases we are introduced to a client by the incumbent bank. The lenders invariably realise that a fire sale of assets or the insertion of a management company in to a business will rarely allow them to recover the full balance outstanding. Occasionally an asset will be bought by a subsidiary or associated company that has been set up by the current lender. 

The types of recent instructions for work of this nature have come from both property companies and also trading companies. Many insolvency firms are anticipating a marked increase in the volume of SME's that are about to go under on the back of historically low margins being re-priced and converted from interest only to fully amortising. Another challenge that will face borrowers who will be comparing their old loan repayments against their new loan repayments is the loan profile itself. In the past 20 year loan terms were common with the market average now being a 15 year term (or loan profile) on an initial 3 or 5 year product which means that cashflow is further strained. This is all before the new lender insists on the full debt being hedged (fixed) for the duration of the product. 

Our role in this process is to act on behalf of the borrower and to look at the problem and deliver a solution that is an improvement on the option that the client is facing before they meet us. When dealing with a case of this type then we seek to not only restructure but to also refinance which is the real solution for both the borrower and the lender. The first step is to thoroughly assess the client's current financial position both commercially and personally. Step two is to assess the current facility and benchmark that against the best refinance options in the marketplace, potentially utilising multiple products. Step three consists of building the solution and presenting the refinance package (being aware of the previous debt repayment obligations and the prospective loan repayment burden) to the current lender along with a target date for redemption. Gradually moving through a process and managing the expectations of the lender is crucial. 

Recent successes have included an SME loan that was outside covenant by some way but needed to be refinanced. We used three different lending products to complete this transaction which saw the lender release the security and the client move to a stable long term lender on competitive pricing.

Our team has a wide range of lending experience across many clearing banks which can result in us having a detailed understanding of the mindset and ultimate motivation of the Insolvency Practitioner, LPA or Bank to the benefit of our clients.  

There is value in instructing us to purely act as the intermediary in the negotiations to ensure that the borrower is treated fairly and is given the opportunity to refinance. Our role also helps remove the emotion from the interaction which then allows us to purely focus on delivering a solution. 

Please contact us for further information on how we can help you exit from your current funder to a competitive and stable long term lender.