Construction Company: Debt restructuring of 156 thousand PLN
We analyzed the credit portfolio and negotiated new terms with 3 banks. We lowered monthly installments, which allowed us to avoid layoffs.
The company Bud-Max Inwestycje from Wroclaw fell into a credit loop in early 2024 due to delays by the main investor. Financial liquidity was at breaking point, and banks were sending final payment demands.
The challenge
The company owner was then managing 7 open construction sites. One of the public investors was late with a payment of 84,300 PLN, which, with 47 employees on the payroll, created a hole in the budget. Penalty interest from three different working capital loans started to exceed the operating profit from smaller orders.
The situation was all the more difficult as two banks had previously refused to extend the credit line. There was a real risk of having to fire 9 qualified fitters just to pay current installments and avoid a bailiff's visit.
Our approach
Our 3-person team entered the company in the second week of January. We started by thoroughly scanning each of the 4 loan agreements — looking for errors in margin calculation and hidden early repayment fees. Numbers don't lie, so we quickly established where the most cash was escaping.
Instead of writing general pleas, we prepared a hard restructuring plan for each bank separately. We went to meetings with branch managers in Wroclaw, showing them real revenue forecasts for the next 6 months. We knew we had to win a suspension of principal repayment so the company could finish current builds without stress about employee payouts.
The solution
We managed to achieve a consolidation of the two loans with the highest interest rates into one product with a margin lower by 1.4 percentage points. This was a crucial move that immediately released funds for current construction materials.
Additionally, the third bank agreed to so-called credit holidays in the payment of principal installments for a period of 5 months. During this time, Bud-Max could spend the earned money on paying the most pressing invoices to subcontractors. Security first — that's why we included clauses in every new contract protecting the company against sudden limit termination in the future.
Results
In less than four months, the company regained stability. Total savings on debt service costs alone amounted to 156,420 PLN annually, which allowed the entire team to be kept intact.
Timeline
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January 12, 2024Audit of loan agreements and verification of payment bottlenecks.
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January 29, 2024Submission of restructuring applications to 3 banks.
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February 15, 2024Receipt of a positive decision on debt consolidation.
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April 4, 2024End of process and signing of the last annex.
"I was sure the banks would just eat us. Korporacyjna Racja Stanu showed us specific numbers in contracts we had no idea about. At first, cooperation went slowly due to gathering papers, but the final effect saved our skin."