We were approached by the director of a small specialist insurance broker who had cash flow problems.
The company was unable to meets its obligations to the insurers who were accepting the risks of the broker’s clients and did not want to write any more business and thus incur more credit.
The broker had historically been very successful but had lost a number of key accounts which resulted in its income now failing to meet its operating costs.
We conducted a short review of the underlying business and concluded that the “book” of renewal income could be sold to another broker thus realising funds for the company’s creditors.
Our advice to the director was to take steps to place the company into Administration thus allowing a sale to take place.
Our advice was accepted and Insolvency Practitioners from Frost Group were duly appointed.
Immediate steps were taken by us to contact the insurers to advise them of our appointment and of our planned strategy and to seek their cooperation with our proposed course of action. They all agreed. We contacted several rival brokers who operated in the same field as our client and generated a great deal of interest in the “book”. We received two offers and after much negotiation achieved a successful sale of the principal asset of the company.
We were able to achieve this result only because the director sought urgent advice when he realised that the financial position of the company was precarious.
Had he carried on writing new business until one of his creditors forced him to act, a sale would not have been achieved and creditors would not have received any return.
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