Background
Tempest Air Conditioning Systems was an air-conditioning and HVAC equipment installer based in Auckland. It had been operating for over 20 years and had large commercial projects in malls, supermarket new builds, and other large-scale retail.
Tempest’s business was hit by lock down delays, issues sourcing materials/equipment and problems with a large job in the Bay of Plenty.
Due to cashflow constraints it was not able to sustain operations in the long term, and the company was looking for a buyer in early 2022. During this process, a potential buyer (RCR Infrastructure) recognised Tempest’s situation and referred them to Waterstone to consider the liquidation and sale of business.
Our Engagement
Once we were referred, we met with the director/majority shareholder to discuss options, reviewed the company assets and liabilities, and formed a view on value and potential sale price. We also engaged professional valuers. We formed the view that a sale of the business as a going concern was a key as it was going to keep staff on and preserve the value of the receivables (especially for jobs in progress).
We were able to draft a potential sale agreement with the buyer. On the day of liquidation on 2 May, we attended the premises first thing to do a stock take, review up to date accounts receivable ledgers and negotiate the final sale to the RCR. This was no easy task with having to negotiate the terms in principle and then navigate the legal clauses and paperwork that made up the bulk of the deal.
However, due to the preparation we had done, the liquidators were able to strike a deal that afternoon and called an all staff meeting to introduce RCR to the company employees and start the handover process.
Next Steps
The sale of the business has been mostly finalised, and staff have been offered contracts with the buyer. The liquidators will now continue to investigate the company operations and seek to make any recoveries for the benefit of creditors where possible.
Result
The result was a decisive and fair sale where the staff were offered re-employment and value was preserved within hours of the liquidation. We are hoping for a smooth transition and that RCR makes a success of the business of Tempest in the years to come.
