Restructuring

If a business is in financial distress we would encourage you to act early. By not dealing with any issues as and when they arise your options to fix them will be limited and may jeopardise the ability to place the business back onto a sustainable footing. It is important that you recognise the early warning signs and take prompt action to address these. These warning signs can include:

• Quality and Frequency of Management Information – having access to quality and timely financial information is key to being able to run a business effectively and making the right decisions;
• Management Team – signs such as a high turnover of key staff can be a sign that issues may lie ahead;
• Market Factors – it is important to understand the dynamics of the market you are operating in. Businesses constantly evolve and if you do not keep up with market trends there is a risk that the business will be uncompetitive;
• Competitive Position – it is important to analyse your market position and the ability of your competitors to gain market share;
• Capital Investment – is the business well invested operating with technology that’s competitive in the marketplace?
• Working Capital – has the business sufficient headroom on its working capital facilities in order to grow and flourish?
• Lost Work – in situations where you compete to win work we would advise you to understand the reasons for any unsuccessful proposals or tenders. Was it simply price related? Or are there other factors that you may need to improve on.

These are all signs that you should constantly monitor and address in order to avoid being in a position where the business is in financial distress.

We recognise that each business is different and it’s important to take time to understand the issues the business is facing. We will closely from the outset to understand the dynamics of the business, getting to know the customer base, routes to market, cost base, working capital and investment cycles. This will give us a strong foundation on which to advise.

We will analyse historic financial data and get an insight into the underlying reasons why the business is in financial distress and what options may be available to place it back onto a sustainable footing. We can develop a formal restructuring plan backed up by financial projections that may include the following:

• Business Rationalisation – focusing internally on any actions that can be taken to improve the financial performance and cash generation of the business such as reducing costs, de-leveraging, restructuring onerous contracts or leases and deleveraging of loss making divisions;
• Negotiating with Creditors & Stakeholders – in situations where the viability of a business is threatened through exposure to a small number of stakeholders, we can negotiate to agree a fair settlement to allow the business to continue to trade. This can include proposals that can be negotiated with banks, landlords and other key stakeholders;
• Debt & Equity Raising – we have excellent relationships with a number of funders and Investors and by working closely with our Corporate Finance Advisory team can advise on what options are available to fund cash flow requirements;
• Taxation – with any restructuring it is important to consider any tax implications and factor in any associated cost.

At Keenan CF we have recent examples of advising on some of the largest and most complex restructuring assignments and would be delighted to discuss any requirements you may have.

In situations where the business is exposed to a large sum of debt that cannot be repaid we can act in an advisory capacity in order to either negotiate a debt settlement and / or seek to refinance your business.

We have excellent relationships with mainstream and secondary funders and can advise on your options.

In situations where the business does have have sufficient headroom to operate effectively, an accelerated sales process may offer the best result for shareholders, funders and other key stakeholders.

Timing is everything and we will work closely with our colleagues in Corporate Finance Advisory to manage the fragile relationship between confidentiality, cash flow and maximising value. We will run a quick and efficient sales process in order to quickly identify key target buyers and seek offers which will place the business back onto a sustainable footing.

We also offer services to buyers looking to acquire a business in distress. We can perform fast, effective financial reviews and advise on an appropriate structure to minimise risks post completion.

Our specialist Energy & Infrastructure team assist clients to participate in business opportunities stimulated by public sector policy and initiatives across all sectors including grant, loan and equity funding for innovation and R&D.

Across the infrastructure sector we assist our clients with advice on:

* Bid and risk management

* Fund raising

* Financial structuring of bids including financial modelling; and

* Production of business cases.

We also have extensive experience across a range of procurement models including joint ventures, Public Private Partnerships (PPP’s) and Arms-Length Management Organisations (ALMO’s).

Our Energy team have experience across existing and emerging renewable energy technologies and can assist companies with fund raising and grant assistance. In addition, our team can assist with structuring and financing innovative models of energy delivery such as corporate Power Purchase Agreements (PPAs) to reduce energy costs across all businesses.   

When a business is insolvent or not viable in its current form, often a formal insolvency process will be unavoidable. Many businesses can simply be victims of market conditions and it’s important you take independent professional advice to minimise any risk of personal liability.

At Keenan CF we have extensive experience on working on some of Northern Ireland’s largest and most complex insolvency assignments. We offer a full suite of services as set out below:  

• Administration – a formal insolvency process where the company is placed under the control of a qualified Insolvency Practitioner. An Administrator has extensive statutory powers to continue to trade the business, often with the objective of achieving a going concern sale;
• Company Voluntary Arrangement (“CVA”) – restructuring a company’s unsecured debts through a formal arrangement with Creditors. We have excellent relationships with key creditors and can advise on submitting a proposal that is fair to all involved and is likely to be implemented in full;
• Receivership – a mechanism used by a secured creditor to take control of secured assets and realise value in order to pay down debt.
• Liquidation – an insolvency process designed to bring the life of the company to an end through an orderly sale of assets and distribution of funds to creditors.

Our senior team can be mobilised quickly to secure assets and advise on maximising recovery to all stakeholders.

When a business is in financial distress it is important that you communicate with your key stakeholders. As part of our role we can review historic financial data analysing the solvency and viability of the company and its ability to generate cash to meet all obligations as they fall due. We will also review any business plans or financial projections prepared by management and highlight any risks around achievability.

This process can be undertaken in a condensed time-frame if required and our findings can be presented in person or via a detailed Report.

In situations where you want to bring your company’s life to an end it may be more tax efficient to extract value through a solvent liquidation.

Under the guidance of a Licensed Insolvency Practitioner all assets are sold with creditors being paid in full. Any surplus remaining is distributed to the company’s members and is treated as a capital distribution.

Any property belonging to the company can also be distributed to the members ‘in specie’ rather than being liquidated and distributed in cash.

This can also be a useful tool as part of a demerger whereby a business can be split and distributed to its members to run independently of each other going forward.