What is a recurring theme that you hear in meetings with clients?
We quite consistently are told “I just need more money”.
Based on our experience, “needing more money” is a symptom of some underlying cause.
The reasons for requiring additional working capital are myriad. Some are positive while others can be indicative of serious underlying issues such as:
Whatever the cause giving rise to the need for more money, the important point is identifying it as a problem or an opportunity. Often these are two sides of the same coin.
We meet with management, operations, sales and other relevant divisions of the company to gain an understanding of the current situation.
If we discover a problem:
If it is an opportunity:
Most often management is aware of the issues but may not appreciate exactly how cash flow is being impacted. Management, dealing with the day to day thrust of operations -the micro view- can lose sight of the big picture. As an independent advisor we bring a fresh perspective and a full toolbox.
First and foremost we are designated accountants and Chartered Insolvency and Restructuring Professionals (“CIRP”). Being Trustees in Bankruptcy is better described as one of the “tools” in our toolbox.
Our preference is to maintain an entity as a going concern; employees with jobs, landlords with tenants, suppliers with customers and shareholders with share value. Indeed that is not always possible. However, in all cases we strive to maximize returns for relevant stakeholders.
Our varying professional experience and credentials provide a complementary toolbox of skills which are helpful in solving difficult business issues. Collectively we have encountered many “lessons learned the hard way” which can be applied to assist businesses in identifying and addressing problems or taking advantage of an opportunity.
Simply stated, there are two broad types of restructuring, informal and formal. The scope of issues present and number of creditors usually determines if an informal or formal restructuring is the practical solution.
If a formal restructuring (statutory driven) is the solution, it is helpful to be proactive and to ensure you have sufficient financial resources to successfully restructure your affairs. In order to successfully restructure a business, the underlying business must be viable.
Essentially, there must be something worth saving.
The end game of either informal or formal restructuring is to amend the terms of current obligations or seek some form of debt forgiveness.
By: Jonathan McNair, Partner of Insolvency & Restructuring, Wolrige Mahon LLP