Context
The client requested operating financing, specifically an overdraft facility and a smaller term loan with deferred repayment, for their business. He had previously tried to obtain financing several times on his own, but was rejected each time due to negative equity (-8 million CZK), which had been recorded for five years and had been even higher in the past.
Task
- Conduct a detailed analysis of the client's financial situation.
- Find out the reasons for the negative equity.
- Assess the current state of the company's finances.
- Identify a bank willing to provide financing.
- Negotiate financing approval despite past accounting difficulties.
legal and financial approach
- We conducted a detailed analysis of the client's situation.
- We established that the negative equity arose five years ago as a result of the previous owner's and director's actions.
- Following restructuring, we verified that the company was demonstrating healthy financial results.
- We contacted the bank most likely to approve the financing.
- We prepared a comprehensive case for approval 'on an exceptional basis'.
Key point
It was crucial to explain to the bank that the negative equity was not a consequence of the client’s current business situation, but rather the result of historical circumstances from a period when the company was managed by a different owner. This enabled the bank to agree to make an exception and approve the financing.
Result
- The client received an overdraft facility in accordance with their requirements.
- A smaller term loan was also approved to strengthen operating cash flow.
- Despite the negative equity being taken into account, financing was provided on an exceptional basis.
“I tried repeatedly myself, always without success. It was only thanks to professional assistance and well-constructed arguments that I was able to obtain a loan that enables me to continue developing the company.’
Legal and consulting areas
- Banking and financial law
- Company restructuring
- Credit financing
Keywords
#operationalfinancing #escrowaccount #loan #restructuring #cashflow
