This document summarizes information from an event on business restructuring solutions for distressed companies. It includes statistics on UK debt levels and borrowing among Scottish small businesses. Case studies describe how the company mlm Solutions helped restructure businesses in various distressed situations, through approaches like debt rescheduling, cost reductions, and creditor voluntary agreements. The key messages are that addressing financial distress early improves outcomes, and that using one's network of contacts is a valuable free resource in difficult business situations.

1. @TheBusJourney #SMEJourney
The BusinessJourney
Event No.5
7 May 2014

2. @TheBusJourney #SMEJourney
The
Business
Journey
Partners

3. @TheBusJourney #SMEJourney
Allan
McLeod

4. mlm
here to calm the waters
mlm here to help
calm the waters
Restructure
Solutions for businesses facing distress
Allan McLeod
mlm Solutions

5. TITLE
UK Debt
“At the end of March 2014, Public sector net debt was
£1,268.7 billion
equivalent to 75.8% of GDP.” – Office for National Statistics
July 2013

6. TITLE
The Scottish SME market
FSB Scottish Members Survey Nov 2013 –
• 47% of members borrow to ensure cashflow
• 37% of those members borrowed less than £5,000
• Whilst 67% of those members borrowed more than £5,000
Scottish corporate failures remain static at around 1,400 insolvencies per year.
Rise of the “Zombie” business. Definition - businesses which are burdened by heavy
debts, generating just enough revenue to pay down interest but usually with no
realistic hope of getting themselves into the black let alone making a profit.
In summary, debt continues to be a significant challenge within our community.

7. TITLE
Reshape Reschedule Restructure
Insolvency
Tools
Our approach
“To provide a solutions based approach to financial distress,
using the wide and varied tools within our armoury.”
- mlm Solutions

8. TITLE
case study - Project Foil
Profile Long est. Ayrshire family business started by Director’s father. T/o
£200k. Strong customer profile.
Issues Debt of £60k, £20k personal guarantee, no profit, director’s salary
£400pm. Tight cost control.
Solution Reshape the business.
Focus on sales strategy. Intro to Business Coach to focus on sales.
Outcome Business has now return to profitability and is reducing the debt
burden. Director taking a salary. Long est business survives,
employees continue, creditors will be paid in full and have continuity
of future supply, trading & professional relationships continue.

9. TITLE
case study – Project First
Profile Rural hotel operated by Partnership. Partnership consisted of 4
family members. T/o £600k.
Issues The 2 local competitors had closed in recent times. Historical debt of
£200k, including a demand from HMRC for £100k. Partners joint &
severally liable, and all facing bankruptcy. £250k equity in hotel.
Solution Reschedule the debt using Business DAS over 8 years.
Outcome Creditors to be repaid 90% of debt, compared to nil if bankrupt.
Equity in property protected.
Hotel continues to trade profitably.
All 4 partners protected from bankruptcy.
Trading & professional relationships continue.

10. TITLE
case study – Steel Engineering Ltd
Profile Manufacturer est. in 1922 specialising in large scale fabrication for
the Marine & Energy sectors. T/o £10m, 100 employees. Blue chip
customer base.
Issues Board changes in 2012 led to change in strategic focus to
renewables market. Substantial investment in equipment for
renewables market, large cost overruns on key projects. This led to
a rapid and severe downturn during 2013. Unsecured debt grew to
£4.4m, which the Company was unable to service, creating severe
creditor pressure.

11. TITLE
case study – Steel Engineering Ltd
(cont’d)
Solution Restructure the business -
1. Board level changes 2. Reduction of workforce
3. Re-focus on traditional markets 4. Reduce occupational costs
5. Return financed equipment 6. Compromise debt via CVA
7. Implementation of key KPIs
Outcome Work pipeline was rebuilt and the business now at full capacity
Workforce reduced to 60 employees
Creditors agreed to CVA , which will return 65p in £
Compares to 2p from Administration or Liquidation
Best outcome for Landlord
Continuity of trading and professional relationships

12. TITLEReshape Reschedule Restructure
Insolvency
Tools
Our approach
Key messages –
• If it’s broke, fix it !!!!
• There is a wide range of tools at our disposal.
• Timing is critical, the sooner tackled, the better the result.
• Use your network. It’s your greatest free resource.

13. mlm
here to calm the waters
mlm here to help
calm the waters
www.mlmsolutions.co.uk
Allan McLeod
07500 373715
amcleod@mlmsolutions.co.uk

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Questions forAllan?

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The
Business
Journey
Partners