In May 2016, Joint Administrators were appointed to Mar City Developments Limited, a property development business established in 1984 in the West Midlands. Gordon Brothers was instructed to value and dispose of the company’s plant, equipment and other tangible assets. Following a site inspection, we established that four Caterpillar construction items, with a total cost price of approx. £825k, was subject to two fixed rate hire purchase agreements with Caterpillar Financial Services (UK) Limited (“CFS”), with an outstanding balance of £540k.
CFS believed the agreements were in negative equity and with insufficient funds available to settle the outstanding balance, it looked as if the assets would have to be returned to the finance company. Gordon Brothers however had provided a Market Value of these items at circa £40k positive equity. We backed this valuation and offered to provide the Joint Administrators a loan facility to clear the finance and allow us to sell the assets in an effort to extract the equity. Within one working day, Gordon Brothers provided funds that enabled the Administrators to make full and final payment to CFS, settling the outstanding finance. The loan proposal was a profit share arrangement where the sales proceeds were split between Gordon Brothers and the Administrators, after the loan facility and costs of disposal had been repaid. The terms of the agreement were such that no arrangement fee or interest was charged and Gordon Brothers bore all the risk, should there be a shortfall against the settlement amount.
We offered the four Caterpillar construction plant items for sale, in an unreserved online auction via the bidspotter platform. A global marketing and advertising programme commenced and on closure of the auction interest had been received from the UK, Austria, Australia, Canada, Germany, Poland, New Zealand, and the U.S.
With our unique offering of asset value expertise and immediate access to capital, we were able to provide a solution beyond that of a traditional plant and machinery valuer. All assets were sold and exported to Australia. The realisation achieved was at a level above CFS’s outstanding balance amount. As a result, thousands of pounds of equity was returned to the Joint Administrators, net of all costs.