Case Study: Choosing Recovery over Administration
Choosing recovery over administration, when the interim CEO placed by Holdsway arrived in Johannesburg, the African subsidiary of a European energy infrastructure group he began leading a business turnaround.
The group itself was in crisis. Once a €600 million global leader in solar energy systems, the business had been caught in a perfect storm. Heavy bank debt of approximately €400 million, collapsing government solar subsidies, aggressive low-cost competition from India, and loss-making legacy contracts had driven the group into insolvency. The lending banks had seized control, replacing the founder and appointing a new Group CEO with a mandate to restructure and ultimately sell the business.
Within that wider turnaround, Africa was viewed as a problem.
The subsidiary, headquartered in Johannesburg with operations in Cape Town, had been poorly managed. Financial controls were weak. Major projects had been mishandled. There were strong indications of corruption masked by inadequate reporting. The incumbent CEO was withdrawing significant sums of company cash. Creditors were pressing. The bankers were unwilling to inject further capital and were considering walking away from the region entirely.
We introduced an experienced interim CEO from our network to the new Group CEO, and he was appointed Interim CEO of Africa with a clear brief: stabilise, restructure and restore the business — without additional funding.
He relocated to Johannesburg and led the turnaround from the ground.
A Subsidiary on the Brink
On arrival, the situation was more severe than anticipated.
The African business was cash-starved and facing aggressive creditor pressure. Financial reporting was unreliable. Installation equipment had been hidden across remote locations. A €10 million court judgment had been granted against the company — a judgment unknown to Group headquarters and capable of triggering liquidation.
Morale was low. Employees feared for their jobs. Suppliers were cautious. Customers were concerned that the business might collapse in the region.
Within days, our interim had suspended the incumbent CEO. Within a month, following due process, he dismissed him. The Financial Manager was replaced shortly thereafter. A new board was constituted, and governance was restored.
It was a decisive reset — necessary to create space for recovery.
Choosing Recovery Over Administration
Early in the assignment, Group leadership suggested placing the African subsidiary into administration. Creditors were circling, and cash was dangerously tight.
It took an experienced interim to advise against it strongly. He chose recovery over administration as a courageous and ultimately the best decision for the business.
Administration, he argued, would permanently damage the Group’s ability to re-enter Africa — a region with significant long-term solar potential. It would also weaken the Group’s overall attractiveness to buyers.
Instead, he committed to rebuilding the subsidiary from within.
The Group leadership supported him, though without providing additional cash.
The turnaround would need to be self-funded.
Restoring Liquidity Without External Support
Cash was the immediate priority.
The interim CEO initiated a VAT investigation that recovered approximately €500,000 in unclaimed VAT — a tool he had successfully deployed in previous turnarounds.
Customer contracts were renegotiated to align payment schedules with project milestones and supply obligations, improving project-level cash flow discipline. Supplier payment terms were gradually extended from cash-with-order to an average of 45 days.
Inventory — much of it obsolete or poorly managed — was reduced by over 50% through supply chain redesign, range rationalisation and scrapping discontinued lines.
Expensive warehousing arrangements were restructured, with relocation plans initiated to lower-cost premises.
The business began generating its own oxygen.
Rebuilding Credibility with Stakeholders
Perhaps the most delicate work lay outside the balance sheet.
Suppliers were engaged openly and shown monthly financial updates. Credit insurers were brought back onside after transparent discussions and presentation of a structured recovery plan. This restored credit insurance cover — critical to maintaining supply lines.
Customers, many of whom admired the Group’s engineering reputation, were reassured through direct engagement and visible operational improvements.
Within the organisation, a demoralised team was transformed into a cohesive unit. Only two roles were ultimately lost. The rest of the workforce rallied around a clear recovery strategy.
Targeted training refocused sales efforts on margin discipline and payment terms rather than revenue at any cost. Product simplification with suppliers improved manufacturing efficiency and materially lifted gross margins.
Meanwhile, the interim successfully overturned the €10 million court judgment that would have forced liquidation.
The company survived.
From Insolvency to Profitability
By the end of the assignment, the Group’s African business had completed a full financial reversal. The business generated a full-year profit and positive cash flow after years of losses. Bookings reached approximately €50 million, with billings of €40 million at year-end. Gross margin improved from 16% to 33%. Fixed expenses were reduced by 49%. Inventory was cut by more than half. Market share in South Africa increased from 30% to 46%. All suppliers remained engaged through the restructuring.
What had been considered a candidate for abandonment became one of the Group’s strongest recovery stories.
A Platform for Sale and Growth
The Group’s mandate from the banks was clear: restore sustainable profitability and prepare for sale.
Africa, once viewed as expendable, became part of the value proposition. The subsidiary was left profitable, cash-generative, governed properly and led by a newly recruited CEO capable of continuing the growth trajectory.
Our interim’s legacy was not simply survival. It was a profitable, well-led business with structural discipline and market credibility.
Why Boards Deploy an Interim CEO like this:
When organisations face:
He combines operational grip with strategic judgment. He is prepared to take decisive action on leadership, protect long-term enterprise value against short-term pressure, and rebuild trust among creditors, customers and employees.
The Success of this Assignment in Summary
The interim took an insolvent, mismanaged subsidiary in a distressed global group and turned it into a profitable, growing operation without external funding.
Cash restored.
Margins doubled.
Expenses halved.
Market share increased.
Leadership rebuilt.
For boards facing existential risk in complex environments, that combination of courage, discipline and execution is not incremental — it is decisive. It’s INTERIM.
For Boards requiring the immediate expertise of an experienced interim to drive change, turnaround or manage uncertainty and crisis, contact Nick Diprose, Founding Partner of Holdsway.
Holdsway has been ranked one of the UK’s top 10 interim management firms for well over a decade.
