Business case
The case concerned the value of repayments arising from loan agreements of real estate investments. At the core of the criminal and civil proceedings was whether the creditors were exposed to a risk of loss from the outset, namely at the time the individual loans were granted. That issue had to be examined against the company’s financial position and a business trajectory that could only be reconstructed in part.
When analysing loan-related risks, it is often customary to assess the reliability of forward-looking projections at the time those loans were agreed. When such projections might lack credibility, a combination of factual reporting with reasonable assumptions and careful financial analysis can provide crucial insights. In this case we found that while certain individual receivables were considered recoverable, for example where supported by valuable real estate assets, their value was effectively outweighed by the overall insufficiency of the company’s asset base.
Accuracy was appointed as an expert and instructed to perform a financial assessment of the loan receivables. In the absence of reliable business plans, the assessment of recoverability was not based on forward-looking projections but instead on a valuation derived from a balance sheet-based assessment of the company’s financial position at the relevant reporting dates. For example, key assets (such as real estate and shareholdings) were revalued and receivables were assessed individually as to their recoverability.