This safe harbour was of a start-up company involved in developing software for managing municipal utilities and related automation. A two director company with over 20 shareholders including a major holding by a public company, the outlook was very promising for the entity both nationally and internationally.
Unfortunately, the commercialisation process was more expensive than expected and although it was always a possibility that further shareholding funding would be required, when that call came not everyone was prepared to commit.
The directors engaged GM advisory to undertake their safe harbour with the first task being to explain to them what would happen in liquidation. Having this baseline assisted the directors in their decision-making including looking at third-party funding, selling the business or part of it, entering voluntary administration, or taking another course of action that could result in a better outcome than liquidation.
The business’s restructuring and refocusing efforts included some layoffs, cost reductions, and ultimately the preparation of a Better Outcome Plan.
GM worked with the directors for 12 months, meeting monthly to review and measure the Better Outcome Plan against actual results, to evaluate the directors’ compliance with the requirements of Safe Harbour and to generally check-in with how the Company was tracking in relation to its preferred long term goal of selling the business.
Due to the Safe Harbour support provided to the directors, they were able to direct that the company continue to trade in difficult circumstances. They eventually sold the business to an overseas entity. All stakeholders were relieved, particularly given that they had come very close to agreeing to liquidate the company – which would have ultimately resulted in little to no return to shareholders and shortfalls to employees and creditors.
Director’s Comments
Ginette and James,
I’m happy to share that Project Edina is officially now acquired by Company X. I wanted to thank you for your support during some particularly challenging moments during the Project Edina journey. I’m now quite optimistic about the future of our products, team, and commercial success.
