Ledger monitoring service key to positive outcome for lender and creditors after client enters administration
Hilton-Baird Collection Services has provided a multifaceted service, incorporating pre-insolvency planning, ledger monitoring and debt recovery, to support the Insolvency Practitioner and asset based lender both before and after their client entered administration.
Our involvement, which began with a ledger verification exercise and Estimate Outcome Statement (EOS) and subsequently saw us engaged to monitor and support Oldco’s efforts to recover the ledger once in administration, resulted in the lender recovering its position within eight weeks.
Currently providing third party collections support to recover the most challenging debts on the ledger, our team’s sales ledger expertise has given the Insolvency Practitioner assurance and visibility throughout the process, and ultimately enabled them to maximise returns for creditors.
A three-part process
We were initially engaged by the asset based lender to conduct a pre-insolvency planning exercise to support the lender’s decision making.
Working alongside the IP, this review saw our team attend site to understand the people, systems and paperwork underpinning the ledger. This process involved a Telephone Debt Verification exercise, the collation of vital paperwork and a knowledge transfer with key employees, and enabled us to provide an EOS based on a number of scenarios.
Once the client entered administration, we were engaged to provide a monitoring service while the ledger was recovered by two credit controllers who had been retained from Oldco. Whilst giving both the lender and IP comfort that the staff were engaged in trying to recover the debt, we also acted as a valuable point of escalation, aided by our understanding of debt recovery, contracts and regulation in the client’s sector, construction.
Visibility and assurance
The monitoring service saw us load and shadow the ledger on our collections platform. From there we could observe payments into the business whilst allocating payments and credit dilutions to provide a great amount of oversight on the collections activity.
Having built a good relationship with the credit controllers, we held weekly updates with them on disputes so we could load them onto our system and regularly report back to the funder on the volume, quantity and whether we felt they could be resolved.
Aided by our support and knowledge, and focused due to the increased visibility of their activity, the retained credit controllers performed well and the lender’s position had been cleared within only eight weeks of administration.
At this point the remainder of the ledger was reassigned back to the client in administration, so we continued to monitor and support the retained credit controllers, acting as a third party extension to assist where their own efforts didn’t lead to payment.
When the credit controllers exited, we were engaged by the IP to collect the remainder of the ledger and maximise potential returns for creditors.
This typically contained the more complex and disputed debts, which were very contractual in nature, containing retentions, and require the most expertise to recover.
However, our experience in recovering debt of this nature, coupled with the insight gained throughout the previous two stages – particularly the ledger review prior to the client’s insolvency – has contributed to some outstanding results for all parties.
Describing the service provided by Hilton-Baird Collection Services, Patrick Lannagan, Partner at Mazars, said:
“We really valued Hilton-Baird’s involvement and expertise throughout this process, from the insight and comfort provided via the ledger monitoring service to their collections support on the trickier debts.
“It was a seamless transition between the monitoring and collections stages, unquestionably aided by the pre-insolvency planning, and their knowledge and understanding of the construction sector and the associated rules and regulations has proved to be invaluable.
“Delighted with the results and we wouldn’t hesitate to partner with Hilton-Baird on similar cases in the future.”