Sale of Nursery School Provider - Resolve Group UK

Case study

Resolve Group UK

Sale of Nursery School Provider

Our client’s Group operated a number of nursery schools in central London. Over several years it built up debt from a number of institutional and private investors to fund property acquisitions and refurbishment costs.

Subsequent attempts to consolidate this debt failed and communication lines between the board (and majority shareholders) and certain minority shareholders (who were also significant unsecured creditors) broke down.

Servicing the accrued debt and dealing with the various inter-creditor and shareholder disputes was becoming an increasing burden on the group.

On-going cash-flow pressure then culminated in the Group’s trading entities being served with a winding up petition by HM Revenue & Customs, in respect of arrears of PAYE and National Insurance contributions.

Following this, a winding up petition was served on the parent Company by an aggrieved minority shareholder. As a result, the Directors sought advice concerning the Group’s options and decided that, in the best interests of creditors, the Group should be placed into Administration.

ReSolve was instructed to assist the board in applying to court for the appointment of Administrators. Simultaneously ReSolve was also instructed to commence a marketing campaign to find a buyer for the business and assets of the Group.

For historical reasons, several key stakeholders proved hostile to the court appointment process. ReSolve’s  independent approach resulted in a smooth transition into Administration (with the support of the High Court) and the continued operation of the three schools.

After a short period of trading, ReSolve completed a sale of the business and assets to a third party. The sale was completed under intense pressure from several unsecured stakeholders who had submitted counter offers for the business. Freehold and leasehold properties from which the schools operated were also subsequently sold to the same third party buyer.

A sale of the Group’s businesses and assets and freehold properties ensured the continued education of some 500 children, preserving the operation of the nursery schools and securing all jobs.

The sale of the business and assets resulted in the repayment in full of the secured creditor. Trade creditors of the three subsidiary companies also received very substantial dividends, with one subsidiary in particular able to pay creditors 100p in the pound.

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