30 March 2023 by John Keenan
When the Directors of Premier Air Services first came to see us, the construction company was in a dire financial situation. Having run out of funds defending litigation of a disputed defect and damages claim from a well-healed former customer, the directors were left with little option but to place the company into Creditors Voluntary Liquidation. We, John Keenan and Peter Krejci of BRI Ferrier, were appointed Liquidators of the company.
The litigation involved the company, the former customer and the company’s insurer, all of whom denied responsibility. As Liquidators, we approached the matter from a different perspective, focussing on the commercial and legal merits, without the emotion that inevitably comes from drawn-out disputes.
We assessed the claims on the facts and sought fresh legal advice as to the options available for the company. We determined that it was appropriate for the litigation to continue, effectively lifting the statutory stay of the proceedings.
We explored the market for funding support, and took on some measured risks, as we prepared for the litigation to continue. Importantly, we demonstrated to both the former customer and the insurer, that the company had the wherewithal to push forward, and in doing so, brought the counter parties back to the negotiating table.
Ultimately, we were able to negotiate a tri-partite settlement which saw the company receive a substantial recovery, contributed to by both the former customer and the insurer.
The settlement was sufficient to discharge all creditor claims in full, returning the company to solvency. The surplus funds were then distributed to the shareholders.
This is what the Director thought:
“We are delighted with the outcome that John Keenan and his BRI Ferrier team delivered. He was able to see through the long-running disputes and negotiate a terrific commercial result for all parties. John ensured that it was a collaborative process, so we were across the strategy and could assist where needed. A great outcome in difficult circumstances.”
Victor Gatt - Director Premier Air Services
- Being unfunded does not necessarily mean that claims should be abandoned without exploring other recovery options.
- Using the Liquidation process can provide a defendant breathing space in litigation, whilst the position is re-assessed.
- Seeking specialist legal advice, with relevant expertise is paramount.
- Exploring external funding and negotiating support from professionals, can demonstrate capacity to push on.
- Strong negotiation, with a focus on the duties owed to the stakeholders, can result in:
- all creditors paid in full;
- a company being returned to solvency; and
- significant distribution to the shareholders.
At BRI Ferrier, we have assisted many directors pursue restructuring opportunities, including where there are entrenched positions in long-running litigation. Our experience assists us to look at the situations dispassionately, with a focus on commercial outcomes for the parties involved within the legal framework. If your business is at a financial crossroads, or approaching one, please contact us at BRI Ferrier for confidential and prompt advice.