Semper can refinance defaulted bank debt with interest capitalised, releasing the borrower from repayments while they get their affairs in order, and simultaneously settle ATO debt and deferred rent.
Snapshot
| Borrower Rate % | 10.25% p.a. |
| LVR % | 60% |
| Loan $ | $3,900,000 |
| State | Vic |
| Property Type | Mixed |
scenario: major pain!
The lingering effects of Covid regulations – deferments of ATO debt, rental and mortgage payments – are creating a rising and perfect storm in the hospitality sector.
One popular chain of eateries in prime retail stores has received a demand for hundreds of thousands of dollars in back rent and pre-Covid ATO debts. The operator – who owns separate retail premises which remained vacant during Covid – now faces a simultaneous demand for mortgage interest deferment, and has found themselves in “Bad Bank”.
Many hospitality businesses facing similar pressures will liquidate and shut down permanently, but for those that enjoyed growing successes prior to Covid, and for whom there is a return to normalcy, the clear objective is to trade out to retain customer support and brand value.
how to spot opportunity
Financial advisors are able to assist businesses in any situation where there are creditor pressures, however ultimately, a debtor must decide to bail-out or trade-out.
For those that choose to bail-out, consequences include loss of credit standing, the inability to stand as a Director of a business for a period of time, and the social and commercial embarrassments that accompany a failed business.
A trade-out makes sense when there is a volution to keep the company trading and an ability to meet the demands of creditors. Professional help is required, be it a Turnaround Specialist or Voluntary Administrator. A Deed of Company Arrangement (DOCA) can be drawn: a payment plan where creditors may agree to receive a reduced amount over time to settle their debt, keeping the business alive through its difficulty, accounting for fees, and reducing pressure from creditors.
However, it’s important to understand early on that Bank mortgagees will rarely participate in a DOCA. A Bank that is owed interest and principal against property is more likely to simply take possession of it and arrange sale.
This is where Semper comes in. Semper can refinance the defaulted bank debt on real property, structuring a loan with some or all interest capitalised, releasing the borrower from interest payments for a period of time while they get their affairs in order. This may include waiting for the property to be re-leased, or sold under a properly arranged vendor sale.
In the case described above Semper also settled ATO debt and the Landlord deferred rent, so the operator could retain their premises and continue trading. Semper cooperated with the Administrator to assist in negotiations to reduce ATO debt but did not vote in the DOCA to ensure that its loan, and the security asset, remained outside of the Administration structure.
If you have any clients with landlord debt ATO debt or property under threat of possession. Call 1800 SEMPER (736 737) NOW
Commercial lending
Semper is a leading non-bank lender specialising in property-secured loans to businesses in any industry with loan sums from $250K – $30M 1st and 2nd mortgages Australia-wide up to a maximum LVR of 80%.
Semper offers a wide range of flexible products tailored specifically for you. We specialise in all your short-term and bridging finance needs.
We don’t do loans the banks won’t, but assist when the banks can’t, usually due to timing or circumstance.
COMMON LOAN USES
Managing cash-flow challenges, such as:
- Tax liabilities and ATO debt
- Replacement finance or deleverage from an existing lender
- Pre-insolvency issues/ release from administration and turnaround
- Creditor payments
- Release of equity
- Debt refinancing
- Seasonal trends
- Business emergencies
CAPITALISING ON AN UNEXPECTED OPPORTUNITY
- Bridging the gap between sale and purchase (residential or commercial)
- Rapid drawdown and equity release
- Buying a business
- Meeting the capital needs of a growing business
