A LAMB'S TALE

Set in compact premises near the College of Law and the University of London, Lambs Bookshop had supplied countless students with their medical and legal textbooks for many years.

The business was successful until the advent of Internet shopping. Later, the College of Law decided it would provide for all the textbook needs of its students and so halving at a stroke the bookshop's turnover. The final blow came when the landlord gave six month's notice of the termination of the lease of the shop.

The company became insolvent and slightly early retirement loomed for the proprietor. It seemed that the company would have to go into liquidation and its stock of books be sold for a low sum. Furthermore, the cessation of trading would have meant the loss of the statutory compensation payable on the enforced termination of the lease.

There were bank borrowings secured by a debenture and the director's personal guarantee. She had resigned herself to having to find up to £30,000 out of her lifetime's savings.

Fortunately, our London office saw an opportunity to use the fast track administration procedure brought in by the Enterprise Act. We reasoned that the company could continue trading for three months by selling off the stock at half price and so collect the statutory compensation from the landlord.

So it came to pass. Trading was at a profit largely because the director worked without any pay and the bookshop stayed open until the compensation day dawned.

Despite the Administration involving trading, the administrator Ian Williams maintained a light touch with the result that our fees were kept to a minimum and the bank borrowings were substantially repaid. The director then settled her guarantee and had the debenture and the few remaining stocks assigned to her. These have been sold through the Internet with the director keeping the proceeds and so reducing further her personal loss.