Shieldtech appoints administrators

21 October 2010

Body armour specialists, Shieldtech, has appointed administrators two days after its shares on the Alternative Investment Market (AIM) were suspended.

The long stock market statement, started with: "As a result of the sustained fall in demand in the UK police market and the adverse impact on working capital, the board has recently explored several options to improve the financial position of the company and to realise value for the benefit of the group’s stakeholders."

The statement went on to say; "These plans were frustrated, however, when the group’s bank informed the directors that it intended to place in escrow the proceeds from the recently announced Turkish order as additional security for its term loan and overdraft."

So looks like the bank put them in an impossible situation. They were protecting their interests. Take a look at our page on the banks view. If you get any of these warning signs then you need to act. The bank is a secured creditor and they can appoint administrators if they have a debenture.

A CVA can help the company avoid administration in that it can write off some of the unsecured debt and allow the bank's debt to be serviced. Getting the bank onside is crucial when negotiating a CVA and we are experts in talking to them, having done 400 CVAs with the bank's cooperation.