Your CFO has just given you the bad news: The latest financials confirm the companys distressed state. The company may default on its loan covenants, and cash is becoming increasingly constrained. What can you do to put your company in the best position for a successful turnaround?
Dont panic, maintain your focus, and concentrate on the three critical elements of a successful restructuring:
- Make an honest assessment of the causes of the financial distress and legal risks.
- Formulate a realistic plan to stabilize and turn around the company.
- Begin clear and transparent communication with the lenders.
The process will require significant efforts on the part of management, in-house counsel, and key employeesbut if carried out properly, it will maximize value for all constituents and help avoid mistakes that could lead to a costly and disruptive bankruptcy filing or liquidation.
Element 1: Honest Assessment of the Cause of Distress and Legal Risks
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