PALACE COURT COMMERCIAL PROPERTY LIMITED

Executive Summary

Palace Court Commercial Property Limited currently faces high solvency and liquidity risk due to persistent negative net current assets and net liabilities despite owning a substantial investment property. While statutory compliance is maintained and asset base is tangible, the company relies heavily on related party loans and has limited cash reserves. Detailed due diligence on funding arrangements, property valuation, and operational cash flows is essential to assess financial stability and going concern assumptions.

PALACE COURT COMMERCIAL PROPERTY LIMITED - Analysis Report

Company Number: 13440751

Analysis Date: 2025-07-20 16:26 UTC

1. Risk Rating: HIGH
   The company exhibits significant solvency concerns with net liabilities reported at £2,710 as of 31 March 2024, worsening from prior periods. Current liabilities substantially exceed current assets, resulting in persistent negative net current assets (~£215k). This indicates potential difficulties meeting short-term obligations. The material secured debt (£297k) further increases financial risk.

2. Key Concerns:

• Persistent and significant negative working capital: Current liabilities (~£244k) far exceed current assets (~£29k), indicating liquidity strain.
• Net liabilities position despite owning investment property valued at £510k: The company’s total liabilities exceed assets, risking creditor exposure.
• Reliance on interest-free, repayable-on-demand loans from directors (£168k) and parent company (£73k) suggests dependence on related party funding rather than operational cash flow.

3. Positive Indicators:

• Ownership of investment property valued at £510,000 provides a tangible asset base that could be monetised or leveraged.
• No overdue filing or regulatory compliance issues; accounts and confirmation statements are up to date, demonstrating sound governance in statutory obligations.
• Directors have assessed the company as a going concern with no material uncertainties noted in accounting policies.

4. Due Diligence Notes:

• Investigate the terms, maturity, and security of the loans from directors and parent company to assess refinancing or repayment risk.
• Review cash flow forecasts and rent roll details since rental income represents turnover, to evaluate future liquidity and operational cash generation.
• Assess the valuation basis and marketability of the investment property to understand potential for asset realisation under distress.
• Understand the company's business plan for addressing the negative equity position and improving working capital.
• Confirm no hidden contingent liabilities or off-balance-sheet exposures that could exacerbate solvency risk.