Our Capabilities - Voluntary Administration and Deed of Company Arrangement

The Issue

The Company was the sole proprietor and distributor of MG and Rover Motor Vehicles in Australia. The Companies other operations included a motor vehicle dealership, spare parts for MG and Rover Motor Vehicles, which the Company was the sole distributor in Australia and technical support to dealers and repairers of MG and Rover Vehicles.

The Company was placed in voluntary administration following the collapse of MG Rover Group Limited (in Administration) in the United Kingdom, as directors of the Company were concerned that the financial exposure to the Company (and its directors) in relation to warranty claims from MG and Rover dealers in Australia would render the Company insolvent.

• The Company’s annual turnover from its retail and whole sale operations was $10 million.
• The Company held 186 new and used motor vehicles at the time of the appointment of the voluntary administrators with a book value of $9 million.
• There were 1,900 owners MG and Rover vehicles in Australia who no longer had a manufacturers warranty upon which they can rely.
• The debt to the secured creditor, under a motor vehicle bailment facility, was $7 million.
• The Company’s unsecured creditors totalled $1.2 million.
  

Scope of the Assignment

Realisation of motor vehicles stock and repayment of secured creditor and unsecured creditors.

The Solution

The Company’s motor vehicle stock was sold for $6.2 million.

The Company’s spare parts operations were also sold.

The Company executed a Deed of Company Arrangement which incorporation provisions providing for the repayment of the secured creditor in full, paying a return to unsecured creditors and paying a contribution towards owners of MG and Rover Vehicles for the cost of purchasing a warranty product for their vehicles.

Value Added

The Administrators assisted the directors of the Company to formulate a Deed of Company Arrangement which provided for a return to unsecured creditors of the Company which would have otherwise been available.  

The secured creditor was highly satisfied with the administration process and the matter in which it was involved by the administrators in the sale of the Company’s motor vehicle.  

The directors of the Company were prominent motor vehicle dealers in New South Wales, and it was imperative for them and their businesses to maintain a standing in the community. Their proposal for payment for a rebate to motor vehicle owners on two fronts, firstly make them aware of opportunities for them to maintain warranty cover for their vehicles, and secondly provided a contribution towards the cost of purchasing such a product.  

Placing the Company in voluntary administration and consequently via Deed of Company Arrangement, maintained the presence of the MG and Rover vehicles market thus assisting in a successful sale of the Company’s motor vehicle stock at auction. It also enables the secured creditor to explore all options in respect to the disposal of the assets subject to their security.