An existing referral partner to Atlas reached out when their client had been issued with a wind-up order and their encumbered financier subsequently ceased funding the National transport and cold storage business. After quickly engaging and discussing the situation with the Director and supporting service providers (business advisor, external & Internal accountant, solicitor and management staff), it was identified that the business was viable however facing a number of factors that resulted in the petitioning creditor issuing court proceedings.
The most critical item was to engage a special purposes financier who understands the distress market and who will support the business through the transitional period. Atlas and the incoming financier moved quickly to establish and issue an offer letter, which then formed part of negotiations with the encumbered financier to allow the client to access immediate funding whilst the refinance was underway. It was critical to ensure the encumbered financier was willing to support the business to the point of refinance which ensured that wages, contractors and creditors could be maintained to a certain point.
A combination of facilities was secured to provide immediate refinance of the encumbered lender, provide a capital injection into the business to deal with petitioning creditors and finally grant access to much needed working capital. Facilities for the refinance to occur included a Term Loan, Equipment Finance (including capital raise against owned assets) and Invoice Finance for working capital purposes. A specialised commercial financier needed to be secured by Atlas who had both a history and understanding of supporting companies in distress and facing potential wind up action. Atlas was critical in the structuring and negotiation of the incoming financiers funding lines and due to strong reputation of assisting clients in the turnaround process the encumbered financier placed the trust in Atlas that the refinance will occur and re-engage the funding lines for a short term to allow this all to occur.
Significant issues still confront the business which all contributed to lost support of some creditors. A defective premises whereby only 40% of the cold storage facility can be utilised due to a leaking room which has flooded parts of the property, and hence an underlying ongoing dispute with the landlord (keeping in mind they are holding a $600K cash bond). Loss of internal accounts staff and struggles for the business to find a replacement, along with an outdated accounting platform. Accounting functions are being corrected with a new cloud-based accounting platform being implemented and data transferred, along with external bookkeeping services engaged. Debtors had taken advantage of non-existent accounts follow up on overdue accounts, receipt of statements, etc. Debtors are now being managed by the Director and trading terms being reduced to more acceptable industry standards.
An action plan and relevant support requirements were identified through the early application process and measures put in place to address these critical shortcomings. The funding has seen the business address a number of critical creditors, alleviate pressures and provide the client with a finance partner that is continuing to support the business and assist in ongoing funding requirements, including the purchase of a new custom build trailer.