Case Study 3: Software Testing Company – Financial Sector
M&A - Business Asset Sale to Void Lease and Legal Case / Industrial Tribunal
"Hello, we are are not insolvent yet", said the managing director calling Cheswick. But if we lose these two legal cases, we will be unable to pay all of our creditors. Plus the building lease is a hindrance to trying to sell the BUSINESS and software testing tools to a well funded buyer.
There was a strong buyer, who rightly didn't want to buy the SHARE CAPITAL as this would mean they bought the debts, the problems and the legal cases. Solution?
Two directors had left one had taken out a massive legal case the other an industrial tribunal. The two remaining directors were shell shocked. The buyers looked like walking away. Our response was "hopefully we can help you avoid running out of money and get the business sold".
Over a period of 3 weeks the buyer agreed to buy the assets, goodwill and software. We had the assets valued professionally and the buyer paid the full value of these. The old company was subsequently placed into voluntary liquidation and this effectively halted the legal case, the tribunal is still to sit (at November 2012) but any award will be met by the liquidation process which may pay a modest dividend to all creditors.
So, having spent nearly £100,000 of the company's and their own money on legal fees, to fight the aggressive shareholder/director's legal action, the executive directors were able to find new employment elsewhere and leave the stress behind. Our fee? Under £4,500!