There has been an undeniable
increase in general insolvencies and in particular the use of the
pre-packaged administration as a restructuring tool.
Lessors have traditionally relied on
their rights of ownership in the assets but may find their ability
to recover the physical asset prevented, in the case of the
moratorium protecting the customer during the administration
process, or in the current economic climate, the asset value
severely depleted.
As a valuable stakeholder in the
business lessors must become more proactive in ensuring they have a
seat at the table when the business options are being considered.
Two ways in which this can be achieved are:
• By taking additional security from
the customer in the form of a fixed and floating charge (a
debenture) which will give a security interest in a wide range of
assets and ensure prior warning of any administration process;
and
• By undertaking wholesale business
reviews of customers as a matter of course.
In relation to the latter course of
action, alignment with a turnaround fund can offer a business
additional liquidity and expertise and the lessor a valuable
resource in undertaking the review.
Sonia Jordan is a partner at the
Salans reorganisation, restructuring and insolvency group
