Reconstructions/Specialist banking
On the up and likely to remain high An increase in the number of under-supported and distressed businesses in Scotland has given – and will continue to give – restructuring specialists much to do
O
ne area that has seen increased activity is reconstructions. There are two main reasons for this – either the companies have been in a stressed or distressed condition or the funders have been not been able to support their customers. This activity was driven by companies themselves getting sorted out or companies that found, although they were okay, their banking partners were either unwilling or unable to give them further funding for
There will be an upturn in stressed and distressed situations. Corporate reconstructions will continue to be very prevalent. There won’t be much of a downturn in activity in the next 12 months Ian Steele, Deloitte
growth. They then sought to either refinance their business or find more supportive partners. The majority of the experts agree the last 12 80 Scottish Deals & Dealmakers
months have been “hugely busy” in this sector. Kenneth Shand, head of corporate with Maclay Murray & Spens, says: “Reconstructions have been very good for us. A lot of our corporate lawyers have moved seamlessly from M&A to restructuring.” David Cockburn, head of corporate finance for Grant Thornton in Scotland, believes last year was a year of large corporate restructures. “What is encouraging about that is that most of it has happened and the balance sheets are in much better shape,” he explains. “That allows the corporates to be on a much firmer footing going forward.” Financial services took a well-publicised battering, particularly the Scottish banking sector, while the construction sector has also continued to suffer. The decline in the fortunes of Scotland’s two big banks – Royal Bank of Scotland and HBOS – provided opportunities for other funders to help out businesses. One such player was Clydesdale Bank. “Looking at Scotland as a whole, we’ve taken on over 250 new trading business customers in the last six months,” says Clydesdale’s regional director, corporate and structured finance, Graham Cunning. “Most are full or partial rebanking.” He adds he is still seeing a lot of companies which are either unhappy with their existing banking relationship or, if they are happy, are uncertain about how supportive their current funder can be.