See the source image

The UK outsourcing firm Interserve went into administration last weekend after its deleveraging plan to stabilise the company was rejected by its largest shareholder, the US hedge fund Coltrane.

However, after applying for administration the company was sold to its lenders through a “pre-pack” administration, which allows it to keep trading. The original deal would have seen the lenders cancel £485m of Interserve’s debt and invest £110m of cash into the company, for a majority ownership of the stock, leaving shareholders with just 5%.

Instead, the administration plan will see the same amount of debt written down an the same cash investment, but in return for complete ownership, meaning roughly 16,000 shareholders have lost their entire investment.