Introduction
In the fast-paced world of performance marketing, financial stability can sometimes be as volatile as market trends. The business, a prominent marketing agency based in Mumbai, encountered severe financial distress due to unexpected setbacks. This case study outlines how our specialized debt resolution services, particularly through the Company Informal Debt Arrangement (CIDA), provided a lifeline, allowing the company to navigate through creditor harassment, legal challenges, and eventually achieve significant debt relief.
Background
Client: A Performance Marketing Agency
- Sector: Performance Marketing
- Enrolment with CIDA: 27th July 2022
- Challenge: Handling creditor harassment and legal actions from 14 creditors, amidst cash flow interruptions.
The Challenge
The business faced a daunting challenge in April 2022 when an anticipated cash inflow from a key client evaporated, leaving them unable to meet their financial obligations. The total debt stood at 2.10 Crores across multiple banks and non-banking financial companies (NBFCs), with a monthly EMI commitment of 13.5 Lacs. Despite having two secured home loans, the business loans were unsecured, adding to the financial strain. This led to missed payments, attracting aggressive debt recovery actions from creditors, including legal notices and personal visits.
Our Approach
Recognizing the dire need for intervention, the business enlisted our services. Our immediate action plan involved:
- Creditor harassment mitigation, we took over the handling of creditor communication, dealing with 150-200 calls daily. By redirecting these calls to our paralegal team and implementing strategic responses, we significantly reduced the harassment, providing the company with much-needed peace and stability.
- Legal support as the business was facing a barrage of legal notices and actions, our in-house law firm, offered comprehensive legal assistance. We managed responses to notices and represented the company in various legal forums across India, addressing cases of cheque bounces, ECS bounces, and arbitration matters effectively.
- Debt settlement negotiation was initiated and by December 2023, with the company in a better financial position thanks to the breathing space our services provided, successfully negotiated debt settlements with all the creditors. Our efforts led to settlements ranging from 50% to 80% discounts on the outstanding debts, translating into substantial financial relief for the business.
Outcomes
The table below highlights the success of our settlement efforts, with significant reductions in outstanding amounts, allowing the company to redirect saved funds towards rejuvenating its operations:
BANK NAME / NBFC | Outstanding as of Dec 2023 | Settlement Amount | Settlement Discount |
ADITY BIRLA | ₹ 12,35,184.00 | ₹ 3,00,000.00 | 75.70% |
AXIS | ₹ 13,21,354.00 | ₹ 3,00,000.00 | 77.30% |
UGROW | ₹ 33,50,598.00 | ₹ 7,00,000.00 | 79.10% |
BAJAJ | ₹ 18,08,096.00 | ₹ 3,80,000.00 | 79% |
FULLERTON | ₹ 13,65,000.00 | ₹ 1,98,672.00 | 85.40% |
HERO CORP. | ₹ 19,96,096.00 | ₹ 5,61,000.00 | 71.90% |
HDFC | ₹ 83,895.00 | ₹ 28,449.00 | 66.10% |
NEW GROWTH | ₹ 22,27,655.00 | ₹ 5,55,000.00 | 75.10% |
HDFC | ₹ 29,82,681.00 | ₹ 10,27,747.00 | 65.50% |
ICICI | ₹ 19,82,817.00 | ₹ 10,14,890.00 | 48.80% |
| ₹ 1,83,53,376.00 | ₹ 50,65,758.00 | Average: 72.39% |
As the table refers these are the outstanding amounts of the loans as of December 2023. Which is roughly 1.83 Crores and the whole debt was settled for 50.65 Lac with an Average Settlement Amount of 5.06 Lacs and an average discount of 72.39%.
Following the settlements, all legal proceedings related to the debts were withdrawn, ensuring that the business could operate without the looming threat of legal challenges over settled debts.
Beyond Debt Settlement
Our relationship with the business extended beyond debt settlement. Recognizing their ongoing legal challenges with clients and other entities, we offered additional legal support at nominal fees. This comprehensive approach not only alleviated their immediate financial and legal pressures but also provided them with strategic advice to navigate their broader challenges effectively.
Conclusion
Our client’s journey from financial distress to stability exemplifies the transformative impact of targeted debt resolution and legal support services. Our holistic approach, tailored to the unique needs of our clients, underscores our commitment to providing lifelines to businesses in their most challenging times.
