A medium-sized construction company was facing severe financial stress during a period of industry-wide disruption caused by economic slowdown and project delays.
The company had several ongoing construction projects but began experiencing critical cash-flow constraints due to:
- Delayed payments from project owners
- Rising construction material costs
- Operational disruptions affecting project timelines
Without intervention, the company faced a serious risk of liquidation and creditor enforcement actions.
The Challenge
The company required a structured and credible strategy to address several urgent priorities simultaneously:
- Stabilise short-term cash flow
- Prevent winding-up proceedings by creditors
- Restructure existing financial obligations
- Maintain ongoing construction projects
- Preserve employment for operational staff
The situation was complicated by the presence of multiple unsecured creditors, each with competing interests and varying levels of confidence in the company’s ability to recover. Without a coordinated approach, creditor pressure could easily have forced the company into insolvency.
Our Approach
Stratagem Business Advisory was engaged to provide strategic restructuring advisory and stakeholder coordination.
Our approach focused on restoring financial visibility and building creditor confidence.
The engagement involved several key initiatives.
- Financial Position Assessment
We conducted a comprehensive review of the company’s financial position, including:
- Outstanding liabilities and creditor exposures
- Project profitability and cash flow forecasts
- Contractual obligations and expected receivables
This analysis provided a realistic view of the company’s ability to continue operations.
- Cash Flow Stabilisation Strategy
Based on the financial review, we developed project-based cash flow projections to determine how ongoing projects could support gradual debt repayment.
These projections formed the foundation of the restructuring proposal presented to creditors.
- Creditor Negotiation and Coordination
We worked closely with management to engage creditors through a transparent and structured negotiation process.
Our role included:
- Facilitating discussions with unsecured creditors
- Presenting financial projections and repayment proposals
- Coordinating creditor meetings
- Building consensus among stakeholders
This approach significantly improved creditor confidence and reduced pressure for immediate enforcement actions.
- Stakeholder Communication and Transparency
Clear communication was critical in maintaining trust.
We assisted management in establishing a structured communication process with creditors and advisors, ensuring that stakeholders remained informed about the company’s recovery strategy.
Outcome
Through coordinated restructuring and stakeholder engagement, the company successfully avoided liquidation.
Key outcomes included:
- Suspension of potential winding-up actions
- Stabilisation of short-term cash flow
- Continued execution of ongoing construction projects
- Preservation of employment for operational staff
- Restoration of creditor confidence
Over time, the company completed several key projects and improved its financial position.
The restructuring process ultimately allowed the company to survive a severe industry downturn and emerge with stronger financial discipline and stakeholder relationships.