We visited a transport company scheduled to enter into Administration.
Whilst the proposed Administrator intended trading the company for a short period of time, finishing off contracts both for the monies the contracts would realise and to preserve the integrity of the existing book debts, the main physical assets once this process was finished were the vehicles.
All the vehicles were subject to finance agreements with positive equity, however as with most finance agreements, there were clauses allowing the finance companies to terminate the agreements in the event of an insolvency process being entered into, thus gaining a windfall profit and effectively “taking” the equity from the other creditors.
The Insolvency Practitioner in question had no funds available and did not expect to receive monies in relation to the jobs they anticipated supervising for at least another 30 to 50 days.
We obtained settlement figures from all the finance companies concerned and upon confirming there was equity in all instances, settled the finance companies from our office bank account, within which we keep a large contingency fund for just such instances.
With the finance companies settled, we were then able to sell the vehicles at leisure once the Administrator had no further use for them, thus preserving the equity in the agreements.
Whether in relation to settling finance agreements, or disbursements such as carriage and advertising, we regularly incur external costs which we settle promptly despite the insolvency practitioner sometimes not being in a position to reimburse us for a period of weeks or months and believe our flexibility in this respect is often of enormous benefit to our clients.