We received an instruction from an Insolvency Practitioner who was expecting to shortly be asked to assist the directors in convening a meeting of their creditors pursuant to Section 98 of the Insolvency Act 1986. Our initial brief was simply to provide a valuation of the company’s assets and advise on potential strategy relating to disposal of same. The company was due to cease trade on the day of our visit.
We noticed upon arrival at the site that the company’s premises were part of a medium sized industrial estate where the landlord operated his own business from a unit next to the entrance to the site which had a 24-hour security guard.
Whilst carrying out our inventory and valuation of the assets, we realised that many of the assets were particularly bulky compared to their value and would require a disproportionate amount of time (and therefore costs) in dismantling and removal, which would take several days. We were further informed at the time of our visit that rent was in arrears.
We quickly realised that it would be impossible to remove the assets from site without alerting the landlord and that there was a severe risk of the landlord distraining on assets which could not be moved quickly.
We prioritised contacting the Insolvency Practitioner from site, firstly to inform him that there was a risk all the assets may effectively be “lost” to the landlord as this may well have impacted on his strategy, and furthermore to seek permission to immediately commence dialogue with the landlord.
We then visited the landlord whilst at site to discuss a mutually agreeable strategy, which in this instance included the suggestion to the landlord that he keep a percentage of the proceeds of the sale in return for not distraining and allowing an organised sale of the assets insitu.
Whilst our auction rooms and storage facilities give us the option to move assets where appropriate, removing assets to our site is not always the best strategy, particularly where costs of carriage become disproportionate to the realisable value.
If we had not commenced dialogue with the landlord immediately, which the Insolvency Practitioner was in a difficult position to carry out himself bearing in mind he had no formal powers at that stage, the landlord may well have distrained within a matter of hours of our visit which would have had severe consequences for the creditors and the Insolvency Practitioner.
We believe this relatively simple example highlights the difference between an agent who simply offers a valuation service and potentially a sales route, to ourselves, as we pride ourselves in offering a complete insolvency related service based on our understanding of the requirements of an Insolvency Practitioner vendor as opposed to a more mainstream vendor of assets.