SME debt restructuring for business recovery

Delivered a bespoke restructuring solution for a distressed UK SME, restoring covenant compliance, protecting lender value and supporting business recovery.

Sector: SME Leverage Finance (Restructuring)

Location: UK

The client was operating in a distressed scenario, having previously restructured its debt to amend the repayment profile and covenant terms. Despite these measures, continued margin erosion and declining cash generation placed further strain on the business. The borrower was unable to meet scheduled lump sum repayments and remained in breach of existing covenants, creating a heightened risk of payment default, Companies House filing issues and potential insolvency if the debt structure remained unchanged.

Mount Street undertook a detailed assessment of the borrower’s financial position, developing forward-looking forecasts to evaluate both the cash runway and broader business performance. These forecasts were incorporated into comprehensive financial modelling to determine a sustainable repayment structure, alongside the redesign of covenant packages to enable more effective and realistic ongoing monitoring.

Based on this analysis, Mount Street worked closely with the borrower to develop a fully supported restructuring proposal. This was subsequently presented to the lender, balancing the need to protect the lender’s position while providing the borrower with a viable path forward. Following approval, Mount Street managed the end-to-end restructuring process, including negotiation support, legal documentation and implementation, while guiding the borrower throughout.

As a result, the facility was successfully restructured, with the borrower achieving full compliance under the revised agreement. The new repayment schedule has been maintained without issue, preserving both the lender’s capital position and income stream. The revised structure has also provided the borrower with sufficient flexibility to stabilise and grow the business, with improved performance leading to the achievement of additional payment triggers and a material reduction in overall risk exposure.