Here's What Worries In-House Leaders the Most About Financial Restructuring
A new survey of nearly 400 in-house counsel from a broad range of companies found that legal department leaders consider poor strategizing and sloppy record-keeping to be the top two risks that could wreck a financial restructuring effort.
November 01, 2019 at 01:57 PM
3 minute read
Smart in-house leaders are preparing for the next economic downturn. And a big part of that prep work should include maintaining corporate financial records and putting together a solid strategy for financial restructuring.
A new survey of nearly 400 in-house counsel from a broad range of companies found that legal department leaders consider poor strategizing and sloppy record-keeping to be the top two risks that could wreck a financial restructuring effort.
Other concerns include: poor communication from management, lack of transparency, disillusioned creditors, ambiguous contracts, negative media attention and cross-border restructuring, according to the latest "General Counsel Up at Night" report from ALM Intelligence and Stroock & Stroock & Lavan.
While most respondents felt that business was good and restructuring wasn't foremost on their minds, in-house lawyers in the retail industry are facing a different reality and are bracing for financial distress. Nearly half of the respondents in the retail sector predicted an increase in insolvencies.
"As such, it can be expected that insolvencies will increase in adjacent industries," the report states. "Given the level to which consumer products and food and beverages are intertwined with the retail industry, the inclusion of each industry as a possible 'at risk' companion is not unexpected."
Looking at regulation and legislation, 46% of respondents agreed that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 introduced needed reforms to the regulatory framework governing financial restructuring, while 18% disagreed.
On the Tax Cuts and Jobs Act of 2017, 29% believed that it would have a negative impact on companies undergoing restructuring, while 27% thought the legislation has or will have a positive impact.
Finally, 23% of respondents believed that the International Swaps and Derivatives Association's rules on credit events should be updated to avoid manufactured defaults, while just 5% didn't think the rules needed an update.
Read More:
'It's Coming': Looming Recession Keeps Bankruptcy Partners on the Move
Is Your Legal Department Ready for the Next Big Crash?
Lost and Found: The Long Road Back for Lawyers Waylaid by the Recession
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