Case Study – Dentist Avoids Losing Home After Practice’s Brush with Debt

Overview

Our client purchased a dentistry practice back in 2019 for around £400k. The practice had been established the year prior and had already amassed almost 3,000 active clients. Its specialism in aesthetic procedures as well as standard medical work saw it gain a strong client base. This meant that at the time of the acquisition, it was turning over almost £400k in business. Our client acquired a 75% stake in the business, with the remainder owned by one other shareholder.

The challenge

Like many other businesses, this dentistry practice couldn’t have foreseen the advent of the COVID-19 pandemic at the start of the very next year. Once the national lockdown kicked in, a catastrophic hit to the practice’s revenues followed soon after.

The problem our client had, was that in order to purchase the practice, they had borrowed £400k from Lloyds. As part of the agreement for this loan, the bank had a charging order on our client’s family home. This was in addition to another £60k personal guarantee that they were liable for should the business be unable to pay its debts.

While these debts were manageable beforehand, the pandemic meant that the practice’s drastically reduced revenue suddenly made these debts unserviceable. The resultant interest steadily accruing on the debt eventually made its repayment prohibitively expensive and unrealistic.

While a creditors’ voluntary liquidation would usually be an option for similar cases, a fellow shareholder’s refusal to cooperate with proceedings, and our client’s personal exposure, meant that this wasn’t an option here.

How we helped

We started to look at potential buyers for the business instead. By placing the company in administration, we were able to source a suitable purchaser for the practice. This buyer operates a number of different dentistry practices across the UK and could see the potential in our client’s business, despite its crippling debts.

After introducing both parties to one another to discuss the possible acquisition, terms were swiftly agreed. The purchaser not only received the practice, but also the valuable client list it had built up.

Our client, meanwhile, managed to avoid having his own home taken from him as a measure to pay off his business’s debts. He also managed to secure an employed position as director at a different branch of the buyer’s UK stores.

Talk to us before trouble hits

We’ve helped countless businesses to assess their options when it can seem as if all might be lost. By contacting us at the very first sign your business may be struggling, you give your company the best opportunity to survive.

As business rescue specialists, we can help you to discover the best possible solution to any issues your company might be having. Call us on 0800 975 0380, or email [email protected] for a free consultation.