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.