Strategic commercial interventions: assurance playbook
As part of the drive for continuous improvement we have developed specific and targeted operating procedures in relation to managing strategic assets. This includes detailed policy and guidance, signposting to existing best practice for those who are managing interventions.
Intervention Options and Case Studies
What is it?
Insolvency, the point at which a business is unable to meet its financial obligations, represents an advanced stage of financial distress. However, before reaching this stage businesses often have access to a variety of financial interventions designed to stabilise operations, restructure debt, and ultimately avert bankruptcy. These interventions, range from private refinancing deals and capital investment to government support as well as formal insolvency proceedings.
This guidance outlines the various intervention options and structures Ministers may consider when seeking to assist a company in financial distress, as part of a response to promote long-term business recovery. It also provides an easily digestible overview of the administration process by setting out the three types of insolvency scenarios for a struggling business – Administration, Company Voluntary Arrangements and Liquidation.
It summarises and explains different financial transaction types – conversion of loan to equity, financial guarantee, purchase of a company’s assets (both asset purchase and sale purchase) and transfer of share capital.
The guidance also sets out some real-life historical examples of interventions undertaken by Ministers and the key underlying financial and legal considerations associated with each option.
What is its purpose?
The guidance is intended to be a short and easily digestible note to improve knowledge and understanding of insolvency / intervention considerations and the options available to colleagues dealing with these cases. It sets out various factors for officials and Ministers to consider when faced with a request to provide financial support to a business by introducing the different options available and how these can be applied in different circumstances whilst also providing key financial and legal considerations for each one.
When should it be used?
The guidance is intended to provide officials with a starting point for acquisition and, in certain instances, divestment considerations, which in general should only be considered after the distressed company has demonstrated that all avenues for assistance in the private and public sector have been exhausted.
It should be referenced by policy teams as part of the package of information collated for and presented to Ministers to provide direction on the potential options available in relation to the financial and legal structure of any intervention to assist a company seeking support.
Useful Resources
Monitoring and responding to companies in distress (nao.org.uk)
Contact
Email: SCADPMO@gov.scot