Restructuring services for charities

Charities, educational establishments and other not for profit organisations, like commercial business, must focus on robust cash and asset management so that they can meet their strategic aims. Trustees and management executives have a duty to ensure that the organisation operates within its financial parameters whilst focusing on its key objectives.

Early consultation with restructuring experts can prevent the failure of an organisation by assisting the management team with practical and commercial solutions ranging from informal advice and support right through to a formal wind up.

How we can help:

  • cash management analysis;
  • review of asset values and associated banking covenant issues;
  • risk assessment and ‘what if’ scenarios;
  • turnaround and recovery advice; and 
  • advice on Defined Benefit Pension scheme deficits. 

As well as offering advice to trustees and executives, we have strong links with the Charities Commission and are on their Interim Managers panel.

The restructuring team can guide you through difficult times and suggest practical solutions to see you through the legal, financial and moral maze to find a successful conclusion for all concerned. This may involve:

  • monitoring of the management and accounting function;
  • a financial or business review;
  • a review of overheads or asset management;
  • diversifying or reducing services provided;
  • a sale or merger of service lines;
  • a ‘tidy up’ of the group structure; and
  • attendance at management and trustee meetings.

Working alongside other members of the charities and education group, we ensure that the best team is assembled to provide innovative solutions to our clients. Set out below are some examples of the type of advice that we can provide.

Turnaround and Rescue advice

Scenario 1

The organisation is experiencing short term cash flow difficulties following a withdrawal of a grant or a reduction in donations. Common causes of this include; key suppliers exerting pressure, secured lenders requiring additional security or tax authorities demanding monthly payments. Managing this situation can be difficult. Our team has the experience of working with all the major lenders and HMRC, and provides straightforward commercial advice in relation to short term cash difficulties and can come to sensible solutions and repayment plans with key creditors.

Scenario 2

A decision has been taken to wind down operations; maybe moving into new sectors or simply rationalising existing services. We can help by providing practical advice as to potential liabilities, dealing with landlords and other contractual obligations, realising property and other assets and commercial negotiations in order to minimise the costs of the exercise.

Formal insolvency advice

In some instances it is not possible to turnaround the financial position or the organisation’s assets remain insufficient to meet the liabilities. Unfortunately in this scenario, the organisation may be insolvent and the Trustees and Directors need to be mindful of the risks of continuing operations in these circumstances and in particular, the potential personal liability for the debts of the organisation. Professional advice should be taken to protect the organisation’s position and explore all possible avenues to aid survival of some or all of the activities.

As Insolvency Practitioners we can advise Trustees and the Directors of their responsibilities under the Insolvency and Company Directors Disqualification Acts suggesting the best way forward for organisations facing these difficulties.

Insolvency of an organisation does not necessarily mean closure and early advice must be sought. A recent assignment provided for the transfer of all services and staff to a new charity via an Administration resulting in a continuation of services and the continued support of fund raisers.

Restructuring and solvent liquidations

It may be that the organisation has undergone a merger or acquisition or simply wound down all operations which have either left a dormant company with no assets or a pot of cash to distribute to an organisation with similar aims. Whilst no activities are being undertaken by these companies, governance costs are still being incurred such as the preparation of annual accounts and returns. A tidy up of these unnecessary companies can save substantial costs and limit future liability of the officers.

Our restructuring advisory teams have dealt with a number of such solvent wind downs and can guide officers through the procedure, whilst ensuring, by working with our tax specialists, that the successor organisations maximise realisations.