PGI settlement for the Directors of a family operated engineering firm located in the South West

£75k

Finance provided

£10k

Shareholder's Funds

£75k

Personal Guarantee Amount 60% Insurer Contribution; max claim £45,000

Sector
Engineering

Location
South West

The business was incorporated in the early 2000s and specialised in engineering consultancy; a family-run business.

The business sought alternative finance to support its working capital position to fund new contracts.

Reason for Business Failure:

During the year, a number of the key customer contacts were delayed which had a material impact on the financial position of the business.

In order to support the business, the owners provided additional funding to support the working capital requirements.

Unfortunately, the delayed contacts fell through and it became apparent that the business was insolvent. In order to preserve the position of all creditors, the business was placed into an insolvency procedure and insolvency practitioners were appointed to handle the company's affairs to make recoveries on behalf of creditors until the eventual dissolution of the business.

Conclusions:

The cash flow pressures placed onto the business as a result of the delayed and ultimately cancelled contracts had a material adverse impact on the viability.

The business had been successful and profit-making since launch in the early 2000s and, indeed, was able to adjust and trade through the 2008-09 financial crisis.

The case study demonstrates the value of Personal Guarantee Insurance; not only for the claim reimbursement to protect the personal estate of the guarantor but also for the support and advice provided throughout the term of the policy.

Final Settlements:

Final settlement agreed at £48,500

£29,100 Total Claim Paid

£19,400 Insured's Contribution

£2,600 Total Paid Out in Fees

Support provided by Purbeck Insurance:

• Pre-insolvency business advice.

• Introduced for possible refinancing of existing facilities and repayment holidays.
• Introduced the client to a Panel Member firm for early intervention and to limit escalation of costs.
• Personal Guarantee negotiator instructed to help reduce outstanding obligations under the Personal Guarantee.

Find out more

www.purbeckinsurance.co.uk

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