ADVISORY

Our Merger & Acquisitions specialist expertise is demonstrated through more than two decades of helping corporates and their owners generate value.

Find out more about M&A and Strategic Advisory

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From our decision to pursue this exit route, it was achieved in under 4 months….a strong testament to the professionalism of the advisory team involved….

Managing Partner Mid-Cap private equity fund

Case Study

A FTSE 250 business, and a leading UK business within its sector, pursued a successful acquisition strategy in late 2015 resulting in the purchase of a group of businesses that have subsequently doubled turnover. Adapting to the synergies this created,

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If you’re looking to grow by acquisition, or require additional capital to fund organic growth or as part of a refinancing, ReSolve can advise you on optimal sources of capital.  Our equity capital raising team will help you to prepare and access capital.

Find out more about Equity Advisory and Capital Raising

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The significant investment constitutes a powerful acknowledgement of the outstanding progress made and milestones achieved since the IPO...

Chairman, International Company

Case Study

In early 2014, David Hill was engaged to work with the Chairman, the Founder and CEO and other key institutional shareholders of an international real estate investor to recommend an equity restructure to repay bank debt, invest in the current

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If you’re looking to restructure all or part of your business, ReSolve can help plan, source and direct finance or refinancing for the short and longer-term business needs. We bring our independent perspective and experience to make effective and high-impact changes to your business structure and models.

Find out more about Debt Advisory and Restructuring

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Our experience of ReSolve has been consistently excellent. We have always found their work to be of a high standard, backed by common sense and highly commercial advice. They show professionalism in striving to achieve the right outcome for all stakeholders. I would recommend them to anyone.

Director, National Asset Based Lender

Case Study

Salt Engineering Limited was incorporated in January 1983 and the Coventry-based business had been trading since 1945. A manufacturer of tools and precision engineering equipment, Salt served a number of significant industries, including aerospace, automotive, power generation and fluid power.

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CAPITAL

If you’re looking to grow by acquisition or in need of additional capital to fund a breakthrough strategy for organic growth, ReSolve can open the door. Our Partner-backed  Mid-Cap Breakthrough Investment fund can be accessed directly or we can co-ordinate introductions to a wider set of third party specialist lenders and investors.

Find out more about Partner-backed Investment Fund

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ReSolve immediately understood our business and the issues we faced and then worked tirelessly to ensure the transaction completed quickly so we can now focus on our clients growing needs.

Managing Director of a company in the Entertainment sector

Case Study

The Company, which operate in the TV and Film camera hire and post production sector, turned over circa £6 million per annum. Though looking at a growing business, they faced a challenge of raising additional working capital to meet increasing

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Declaring solvency in a group

Is the Company solvent?

This is the primary question a Board must ask itself before embarking on a programme of solvent winding up. The test of solvency in a solvent winding up is whether the Company is able to meet its debts in full within 12 months of the date of liquidation, plus any interest that may be due on those debts. This can include interest to which the creditor is entitled on the debt to the date of liquidation, plus interest on the debt after liquidation at the judgement rate, or 8 per cent.

Assuming that the Company is able to meet this test by reference to the latest management accounts, what about the existence of contingent liabilities, and how does the Board get around that issue when making a solvency declaration?

A contingent claim such as the one in our case study might exist where a dispute arises relating to a liability, or a claim from a creditor is not yet liquidated owing to the non-crystallisation of a potential future obligation. The Board should recognise the debt as a contingent liability when making the declaration of solvency. It is not due for payment or considered due at the date the declaration is made, but there is the potential for it to become due in some way, in time. In addition, the amount payable could be considered to render the Company insolvent.

Does that mean the declaration cannot then be made?

The answer to that question lies in the judgement of the Board in making the declaration. A majority of the Board must make the declaration and so must be confident the Company is able to deal with its debts, plus interest owing on those debts, to meet the test of solvency. If there is any risk that the contingent claim will be material enough to put the test at risk, one way of overcoming the problem might be to seek an indemnity from another, asset-rich, group company to cover this risk.

The indemnity could provide for full payment of the debt, whatever the amount, should the claim ever materialise in the winding up and be assessed by a liquidator. Even if the claim is potentially insured, the indemnity option ought to be considered since the primary obligor is the Company. It should also cover the costs of dealing with the claim. The indemnity would in effect be covering the Company’s liability to meet the obligation to pay and would be entered into between the indemnifier and the Company.

What if the Board is not confident an indemnity will provide them with sufficient confidence?

The Board should take legal advice and could seek a ‘letter of comfort’ setting out why they can rely on the indemnity from the group company. This might come from a solicitor advising them that treating the claim in this way would enable them to declare solvency. The letter might make reference to the credit rating and the most recent financial results of the indemnifier in providing the Board with the comfort it needs. The more indemnities which are available the better, of course!

Does this indemnity cover a liquidator then?

Not sufficiently. Whilst the indemnity does give the Company comfort – comfort a Board can rely upon when declaring solvency – a liquidator is not afforded the same protection. A liquidator would seek a similar indemnity himself when accepting the appointment so that he is personally provided with indemnity cover should claims exceed assets.
ReSolve has had experience of working in a number of large Group situations where such an indemnity has been provided. We work with a number of specialist legal firms that have provided such documentation and are able to support Boards and indemnifiers in ensuring the test of solvency is met.

Whatever the reason for your corporate simplification requirements, ReSolve has the experience, qualifications and know-how to ensure you are dealt with professionally, attentively and expeditiously bringing about the outcomes you desire.

For a confidential, no obligation conversation to discuss your options, get in touch here or call Ben Woodthorpe on 020 7702 9775.

The above is for guidance purposes and ReSolve or its employees cannot accept any liability whatsoever for loss, damage, cost or expense incurred as a result of action taken in reliance of the contents of this guide or any matters arising there from.

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