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Protecting the financial interests of developer client while maintaining relationship with troubled subcontractor

A developer client was owed large sums of money by a subcontractor who needed an immediate injection of cash to remain liquid and complete work on my client’s property development.

My client needed guidance on the structure of a loan and securities package to protect their investment and mitigate risk in the event of the subcontractor’s bankruptcy - while also fostering the ongoing relationship. Replacing the subcontractor would have had a significant financial impact on my client’s development.

As part of the solution I drew on the specialist services of our Business Services department to document the shareholder agreements necessary to support the working relationship between the subcontractor and my client. Some of the security offered by the contractor had legislative restrictions on its use, and I also provided guidance on that security.

I implemented a solution that secured both the existing and new funding and supported the working relationship between the developer and subcontractor. My client has subsequently preserved far more value than he would have if the subcontractor had defaulted or become bankrupt, while at the same time assisting the subcontractor to avoid insolvency.

"The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication."