Jean-François’ company’s lack of liquidity

For the past 18 years, Jean-François has run a small business specializing in the manufacture of machined products. Thanks to the quality of his work and the loyalty of his customers, his business has grown steadily. Confident in the future, he decided to expand his plant to meet growing market demand.

Shortly after the work was completed, one of his most important customers declared bankruptcy, leading to a sudden drop in sales and a major imbalance in his cash flow. Repayments take up too much room in the budget, to the point where it becomes difficult to make ends meet each month. In an attempt to save his business, Jean-François injects personal funds into his operations. Despite these efforts, the situation continues to deteriorate. His file is transferred to his bank’s special accounts department, and pressure from creditors intensifies.

In order to preserve his reputation and maintain production, Jean-François chooses to pay his suppliers before his tax obligations. Soon, government agencies begin threatening to seize the company’s account to recover the sums owed.

Exhausted, Jean-François can’t sleep at night. He worries about his employees, fears that he will no longer be able to pay their salaries, and feels the weight of responsibility falling on his shoulders. His priority is no longer growth, but the survival of his company and his team.

The objectives

– Avoid seizure by tax agencies;
– Avoid non-payment of employee wages; and
– Restore your company’s finances and avoid bankruptcy.

The solution

Given the urgency of the situation, Jean-François acted quickly with the help of his advisor Émile at BRESSE. From the very first meeting, a clear strategy was put in place: file a notice of intention to make a proposal. This immediately suspended the tax agencies’ recourse, preventing the seizure of the company’s bank account for a period of 30 days.

During this critical period, Émile contacted the financial institution’s director of special accounts, as well as representatives of the tax authorities, to negotiate a viable turnaround agreement. At the same time, close monitoring of liquidity was instituted, enabling Jean-François to better plan cash inflows and outflows, while retaining the confidence of his business partners.

A composition proposal was then presented to the creditors, providing for payment of 50% of the debts over a 60-month period. This realistic offer, supported by a detailed recovery plan, was accepted by the requisite majority of creditors.

The result

Jean-François’ company was saved. Thanks to the rapid intervention of his advisor and the implementation of a well-structured proposal, it was able to avoid bankruptcy, stabilize its financial situation and preserve its jobs.

The plan accepted by the majority of creditors enabled the company to halve its debt burden and significantly reduce monthly payments. The debt service coverage ratio improved significantly, giving the company back the ability to invest in its operations.