A viable Australian business with ongoing contracts couldn’t fund its own restructure. Two unencumbered luxury vehicles unlocked around $200K, enough to put a Liquidator in funds, run a VA process, and come out the other side trading.
The situation
An Australian business with ongoing contracts and a viable model was sitting on a pile of legacy debt it couldn’t trade out of. ATO arrears. Old supplier balances. The kind of accumulated weight that doesn’t shift no matter how good next quarter looks.
The directors had two real choices. Liquidate the entire business and walk away. Or go through a voluntary administration, restructure the debt, and keep the business alive.
They wanted to keep the business alive. The contracts were real. The work was coming. The numbers worked once the legacy debt was sorted.
But there was a problem. To run a voluntary administration, you need to put a Liquidator in funds. The Liquidator needs money in their trust account to actually run the process. Pay the costs. Manage the creditors. Work through the deed of company arrangement. And this business, despite having contracts in place, didn’t have the cash sitting around to do that.
Banks weren’t going to lend. Cash flow lenders weren’t going to lend. Once a VA is on the table, the traditional credit doors close.
Plenty of viable businesses end up in liquidation not because the business is dead, but because they can’t fund the process that would have saved it. Funding a voluntary administration is one of the most underserved corners of Australian commercial finance.
The asset
The directors owned two luxury vehicles outright. A McLaren. A Porsche. Sitting in a garage. Worth somewhere in the realm of $200K to $300K between them on a forced-sale basis.
For a traditional lender, those vehicles are personal assets, irrelevant to the business credit decision. For an asset-based lender, those vehicles are the asset. The borrower is still the business. The security is just sitting in a different garage.
The need
Around $200K. Fast. To fund the Liquidator’s trust account and let the voluntary administration process actually begin.
And it had to be short-term. Three or four months, max. The whole point was to release the asset back to the directors once the business was restructured and able to refinance into a proper long-term facility.
The structure
The deal went through as a Park It facility. The two vehicles were stored safely at one of our partner facilities for the duration of the loan. ABL advanced ~$200K against them. The funds went into the Liquidator’s trust account, the voluntary administration kicked off, and the directors didn’t have to sell their assets at a discount or under duress.
- Product: Park It
- Asset class: Two luxury vehicles (McLaren, Porsche), personally owned by directors
- Advance: Approximately $200K
- Term: 3 to 4 months
- Use of funds: Funding voluntary administration via Liquidator trust account
The outcome
The voluntary administration ran. The directors negotiated with creditors and reached a deed of company arrangement, paying a percentage in the dollar on the legacy debt instead of the full amount. The business came out the other side with a much cleaner balance sheet.
And here’s the part that matters. Once the legacy debt was off the books, the business became a lending proposition again. A finance broker is now restructuring the company’s debt and refinancing it into longer-term facilities. Part of that refinance includes paying ABL back, releasing the McLaren and the Porsche from our partner facility, and returning them to the directors.
Business still trading. Contracts being delivered. Assets back home.
Carrying all of that debt and trying to trade your way out of it can be an impossible situation. Asset-based lending can come in handy for a couple of different things, whether it’s just dealing with cash flow on a day-to-day basis, or avoiding a liquidation, or being able to fund a voluntary administration. There is a solution.
Why this deal worked
Three things had to be true for this deal to work. They’re the same three things every Park It deal needs:
- An asset with real value, owned outright. The McLaren and Porsche weren’t financed. They weren’t tied up in another loan. They could be lodged cleanly.
- A genuine short-term exit. The directors weren’t trying to borrow their way out of a permanent problem. They had a specific event, the VA process, with a defined end and a refinance plan waiting on the other side.
- The right partners around the deal. A Liquidator who could run the VA. An advisor who saw asset-based lending as part of the toolkit. A finance broker waiting in the wings to refinance once the legacy debt was settled.
Asset-based lending isn’t the answer to every business problem. It’s a specific tool for a specific moment. When timing matters more than rate, when an asset is available, and when there’s a clear way out. For more on the category, read our complete guide to asset-based lending.
If you’ve got a client with a viable business sitting underneath unmanageable legacy debt, voluntary administration may be on the table. But the funding gap is the killer. An unencumbered asset in the right hands can be the difference between a liquidation and a restructure. Worth a 10-minute call before the options close.
Got a client running out of options?
If your client has a viable business, an unencumbered asset, and a clear way back to refinance, we can usually structure something. Indicative terms within 2 hours. Same-day settlement when the asset is secured.