Client Facts and Results

Many companies approach us and request our mediation to form loan repayment agreements and business plans that primarily ensure the viability of their businesses, the normalisation of their existing borrowing obligations, and the liquidity required to continue their activities.

The non-performing loan cases, by definition, require specific handling since the restructuring and redefinition of the non-performing loan must meet:

• the terms of each financial institution involved (instalment amount, interest rates and loan duration),
• the current financial situation of the company,
• the liquidity the company needs to maintain its activities, ensure its viability, etc.

One of the cases we were called upon to handle and manage involved non-performing loans to a Credit Acquisition Company and a financial institution.

Clients Facts

A company active in the investment real estate sector had non-performing loans to a Credit Acquisition Company over €4.1 million and €0.5 million to a financial banking institution, with total lending reaching €4.6 million.

The company's lenders had filed lawsuits and, at the same time, had started the procedures for the auction of the company's real estate assets and the collection of shareholders' and directors' personal guarantees.

Over time, this resulted in establishing a disadvantageous situation for the debtors, with severe consequences for the company's operation and survival and the directors' and shareholders' solvency.

The appointment of RSM

RSM Cyprus assignment was to mediate and liaison with the Credit Acquisition Company and Financial Banking Institution to draft an agreement that will assist in the successful restructuring and debts consolidation so that the company is viable and avoids the risk of directors' bankruptcy.

Results

Overall, reaching an agreement with the two organisations took almost a year.

The RSM experts achieved the company's total debt amounted to €4.6 million, to be reduced by 26%, reflecting a €1.2m reduction of the total debt.

The remaining amount of €3.4 million as per the two newly formed agreements enabled the company to proceed with a new loan following a secure repayment schedule, considering its financial capabilities and in accordance with its projected cash flows and future income.

Moreover, the two financial organisations withdrew the lawsuits against the company and its shareholders.

The company is currently servicing its lending obligation on time, ensuring its future viability and growth.

Author: Nicolas Agathocleous, Partner, Board Member

Contact us directly to discuss your non-performing loan issues or your liquidity concerns and business objectives, or arrange a personal meeting at one of our Cyprus locations.

Email:  n.agathocleous@rsmcyprus.com