Corrective actions in companies are usually taken too late, when restructuring has already become an urgent need, says Małgorzata Anisimowicz, President of PMR Restrukturyzacje.
When do companies declare their willingness to open restructuring proceedings? Isn't it too late?
Although the premise for remedial restructuring appears already at the stage of symptoms flowing from the environment and the indicator analysis of the risk of insolvency, in practice remedial actions are taken late, and restructuring becomes an urgent need.
Success, or lack thereof, depends largely on the entrepreneur himself, in particular on the time in which he makes a decision regarding support. Reacting too late and taking action at a stage of deep crisis and the threat of insolvency is already a game for the life of the company. Meanwhile, taking advantage of restructuring tools in the early stages of a crisis, it is virtually certain that success will be achieved.
How can companies recover from a deep crisis?
Restructuring law is in itself a tool protecting against bankruptcy. And it should be used to prevent the crisis from deepening. However, finding a repair solution for one or two areas affected by the crisis, together with financing scenarios, is not enough. It is the simultaneous implementation of processes of exiting the portfolio of certain products or resources and entering new areas of activity, building new resources, a new business model or changes in the capital structure.
Restructuring then has the greatest strategic dimension for a given enterprise., covering all its areas, requiring comprehensive actions. It is radical in nature and touches on every element from the method of management, individual areas: financial, legal, market, product, property, organizational, technical or resource, to open cooperation with all stakeholders of the enterprise.
When you talk about stakeholders, who do you mean?
The same company, its business and public creditors and investors. A win-win solution must be found – primarily through the synergy of cooperation. Using restructuring tools protects not only the entrepreneur himself, but also his creditors.
The purpose of conducting restructuring proceedings is to conclusion of an agreement with creditors by accepting arrangement proposals. Informing creditors on an ongoing basis during the restructuring proceedings, including changes, the restructuring plan or presenting the private creditor test, builds the most important thing in the proceedings – trust and knowledge about the degree of the company’s commitment to repaying liabilities.
In the case of one of the last deep restructurings conducted by us, thanks to the adopted comprehensive solutions and strict current information for the parties, the absolute majority of creditors, including public creditors, voted in favor of accepting the arrangement. The company also gained a private investor for whom ongoing monitoring of the results of the proposed restructuring plan and the adopted arrangement proposals may constitute a basis for further cooperation.
Corporate boards often make it difficult to save a company. They are slow.
They hope that they will cope with the growing phase of the crisis themselves. We must remember that failure of management boards to fulfill their statutory obligations to file bankruptcy applications on time results in personal liability of persons representing the companies, including criminal liability. Filing restructuring applications and initiating proceedings restructuring of the company it protects the company from aggressive debt collection, and also releases the management from personal liability. Unfortunately, there is very little awareness of this among entrepreneurs, which often leads to a complete paralysis of the business and the filing of bankruptcy applications by creditors.
How to efficiently go through restructuring?
Each restructuring has its own specifics, depending on the type of restructuring chosen and the market environment in which the company operates. These are specific steps: selecting a restructuring advisor with an efficient team that can support the entrepreneur in all areas of his activity, including mediators and negotiators; familiarizing yourself with the crisis situation and designing Restructuring architecture, which does not have to take the form of judicial restructuring in the initial stage of the crisis; selection of the form of restructuring; implementation of the necessary restructuring measures, including often acquiring an investor; operational unblocking of the enterprise; conclusion of an agreement with creditors and return to normality. Above all, it is necessary to believe in success.
on October 2, 2019
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