Why the client needed our help
Our clients were the liquidators of a company who needed assistance realising the key asset in the liquidation. This asset was a secured debt owed to the company (in liquidation) by its wholly-owned subsidiary. However, the subsidiary was, itself, in company voluntary arrangement.
Our client needed legal advice as to whether it was better to participate in the company voluntary arrangement (receiving dividends over the course of five years), to sell its right to participate in the company voluntary arrangement for an immediate return, or to enforce its security over the subsidiary.
How we helped
We provided advice to the liquidators on the company’s rights (including participation and enforcement rights) in relation to the subsidiary’s company voluntary arrangement. We also provided advice to the liquidators on the position of a secured creditor of the company under (purported) fixed and floating security.
This advice helped the liquidators to conclude that it would be a better outcome for all parties that they sell the company’s rights in the subsidiary’s company voluntary arrangement for an immediate return. The price for the sale was structured so that the company’s unsecured creditors received the same amount that they would have received had the liquidators chosen instead to participate in the company voluntary arrangement, but where such recoveries would have taken five years to receive.
We then assisted the liquidators with completing the transaction.
The outcome
Soon after being appointed as liquidators, our clients were able to achieve the same recovery for the company’s unsecured creditors as would have been achieved over the course of five years had the company instead participated in the subsidiary’s company voluntary arrangement.
