Property prices are vulnerable to economic downturns and values can drop below loans taken to fund development. Costs to complete development projects may be greater than sale value in a depressed market. We have experience in managing negotiations with lenders and other stakeholders to reposition the business, renegotiate loans or seek alternative financing. We assisted Old Nene Golf and Country Club as the property market collapsed in 2008, keeping the business above water whilst an exit was negotiated that minimised damage to shareholders’ personal funds.
Insolvency or Receivership may not be avoidable, and this can add further complications with multiple stakeholders, as occurred on Juxta Base, where a viable leisure business was preserved under our guidance whilst the original development plans fell victim to a property market downturn. Likewise, in Marble Hill a reduction in loans was negotiated, enabling the developer to refinance and complete the project as the market recovered. Our professionals have the knowledge of stakeholder negotiation to bring credibility to difficult discussions as markets fall or development costs escalate.
Notes, insights and reflections from Matthew, one of our directors and turnaround experts, as he works with companies during Lockdown.