After B&C broke the news in December that Cheval Bridging Finance was closing its doors after 17 years, we heard from an anonymous inside source about “vulture” tactics, what really happened and a last-minute attempt to resurrect the lender…
 
Cheval Bridging Finance entered the market in 1995 and became one of the first regulated bridging lenders in the industry.
The lender made the decision to wind down last year after it was unable to secure further funding from its existing principal source, Clydesdale Bank.

This decision was as a result of the bank’s strategic review which saw Clydesdale’s parent company, National Australia Bank, reposition itself in the market.

FUNDING:
Clydesdale had indicated between January and March 2012 that it was going to be pulling funding lines in the UK. However, the institution had stated to Cheval that despite the company being property-related its specific funding line was not considered to be part of its drawback plans in the UK.

NEGOTIATIONS:
Cheval was already nearing the top of its main facility and so began to negotiate an extension of the facility with Clydesdale and looking at other funding options.

Cheval had of course hoped to renew and extend the facility, which was indicated by the bank, however as time went on the banks’ team dealing with the withdrawal of the facility wanted it to be repaid.

In the on-going months of negotiations, the first signs that Clydesdale were not in a position to renew its facility became apparent, at which stage Cheval started to heavily look at alternative backing.

OFFERS:
There was much interest in the lender across the board, from:
-    Existing lenders who just wanted to add a new arm to their growing brands;
-    “Vulture” lenders sought to buy Cheval’s loan book. However, this was not an option as the loan book was not for sale; and
-    Start-up businesses, which were looking at an easy avenue into the market, by buying an established lender, a recognised brand, and also a regulated entity.
Approaches were also made purely looking at attaining the systems the lender had in place.

WINDING DOWN:
It was only until late October/early November did the lender realise that Clydesdale was definitely not going to extend the funding line. Nothing had materialised from other talks and Cheval had failed to secure new funding by November/December. The main shareholders were left with no option but to refuse any acceptance of new business and start to wind down the firm.

The team was informed that the line would not be extended, the facility would run-off until its due date and loans would not be called in, and that they would run their natural causes in regards to their respective terms.

The last loan that Cheval facilitated was around December 2012.

REDUNDANCIES:
The majority of the team that was working at Cheval at the time have now secured new positions at respective organisations; most recently Gavin Diamond’s appointment as a Director at Merchant Cash Express.

The timescales of the redundancies depended on different contracts and how long some members had been part of the company. At its peak at the end of last year there were ten team members.

B&C spoke to Allan Kay, one of the directors at Cheval, to confirm our source’s information, which he did in part. He said: “I was with Cheval ever since it started and helped and saw it grow to the lender and name it became.”

We asked Allan what he would have liked to have seen happen in regards to the negotiations, he said: “I wanted to continue to see Cheval blossom, whether that was as part of an existing lender’s portfolio or indeed a new company, but definitely under the Cheval name and brand.”

DEAL FAILS AT 11th HOUR
The shareholders are still keen on entity purchase talks and we were informed by our source that there was “a private consortium currently in talks with the shareholders, a result of which may be on the horizon”.

However, many industry sources have now confirmed to B&C that the deal has fallen through at the 11th hour.

FUTURE:
Cheval has been and is currently collecting in the book. It remains as a regulated entity, which is neither in administration or liquidation.

Whether someone existing or new steps in to purchase the entity remains unclear, but what is true is that whoever does acquire Cheval, they will have a quick route to regulation and have a big, well respected arm to their company going into the future.