Case Study 2 – Negotiating with the bank to ease cash flow

Like many others, the downturn saw our client trading profitably, but experiencing pressure from the bank. With a sizeable property portfolio, against which loans were secured, the client found themselves in a very stressful and costly situation. This resulted in them being unable to fully fund loan repayments, whose terms had been agreed during more prosperous times.

In our opinion, the bank had regarded recovery of the total loan balance as doubtful and had most probably made a bad debt provision. Directors at Milne Craig managed to negotiate a settlement with the bank, approximately 75% of the total borrowings, whilst introducing the client to an investor who held significant capital. With interest rates at an all time low, the investor’s capital was underutilised and the individual concerned was happy to consider purchase of the property portfolio.

The debt with the bankers has been effectively fully repaid and our trading client now pays a rent which is substantially less than previous loan repayments. The investor is happy that the rental income achieves a much better return than other alternatives in the current climate.

Cash flow has significantly improved and our client can now continue to focus on their business. Down the line, there is an option to repurchase the properties should that fit with their longer term objectives.