Board advisory and support services to Companies in distressed situations
In many turnaround situations Boards are faced with complex, challenging and even conflicting choices. Directors are required to exercise due care in difficult
times or face severe financial penalties of their own when businesses trade in distressed conditions. Management information may be inadequate or incomplete of a
range of issues and depending on the reasons for the distress may even be suspect or deliberately misleading.
Auditors, while often guiding Boards, are in law required to independently assess the plans to support their going concern conclusion and in circumstance of
Commercial Insolvency have to consider that the company may be committing a reportable irregularity. They must be independent and not best suited to advise the Board.
The also cannot hand it over to their advisory practice as the conflict of interest is simply too great.
Corporate-911 has experienced operational managers who know and understand the Directors challenges and who can assist in evaluation of the plans and the strategic
choices and trade offs the directors must make. We will provide assessments of the financial and business plans submitted to boards and evaluation of the options
presented by management.
We also support the Board by pre business rescue assessments and the development of strategy to manage the process of business rescue.
In business rescue we support the compilation and hand over of the director’s statement of affairs. This is a critical step in limiting the director’s
liability and ensuring the practitioner has all of the information available to the Board. The hand over is mandatory within 5 days of the appointment of a practitioner.
Our firm can also assist in ensuring meeting and companies act governance is of the highest standard through proper convening and running of meetings ensuring
proper minutes and resolutions and independent oversight of the crucial meetings when a Board is faced with going concern deliberations. This is often the starting point
for turnarounds and business rescue deliberations.
Chapter 6 business rescue management
Corporate-911 provides access to seasoned business people and professional advisors. We are able to provide access to the whole range of
professionals required to administer a business rescue and corporate turnaround including the senior practitioner accountable for the business rescue plan
and charged by law with the implementation of the plan.
We also prepare pre business rescue assessment of candidates for rescue and advise Attorneys and their clients on the likelihood of rescue. We assess the
business rescue plan for holders of securities and secured and unsecured creditors and advise on their strategy in business rescue.
Business valuations and review of valuations for directors
Businesses are worth more than the value presented in the financial statements. When assessing business plans in turnaround Boards and providers of capital
will want to know when will that value translate into cash flow to pay the providers of capital. Shareholders may be happy with adequate returns and growth
but creditors and financiers want to be paid in cash.
Corporate-911 will provide independent directors with an impartial review and expert opinion on the business plans and valuations presented to the directors.
The review will assess the technical adequacy, the realism of the assumptions underlying the plan and the risks associated with the plan.
Funding needs analysis and options report
Based on the business and financial plans and the assessment of the current financial structure and funding Corporate-911 will present a
report on the funding requirements and on all of the available funding alternatives for the business or project and provide an independent assessment
of the risks and costs of the options.
This is key the success of any business rescue and court will not allow a plan to go forward unless there is a reasonable likelihood of success. The absence of
a adequate and thought through funding plan will result in failure.
Solutions and options for creditors
One of the major benefits of Chapter 6 business rescue is that it halts all litigation and actions against the Company and provides a breathing space to renegotiate
major contracts and terms of payments with all categories of creditors. If you are a creditor unless this is managed properly you could be the next in line for
rescue or liquidation.
Corporate 911 is also available to advise creditors and providers of finance on whether they should accept the business rescue plan offered by the Business
rescue Practitioner and how a better outcome could be secured for the creditors. Business rescue has strong provisions for enforcing creditor clampdowns and
buyouts of claims. This provides a very real way of managing the creditors risk in business turnarounds and needs careful consideration. We will develop mandates
and strategies for creditors and holders of securities facing buy outs of their claims.
Corporate-911 in the course of implementing business rescue will develop the plan for managing the creditor communication, meetings, key messaging and
acceptance of the business rescue plan. Clearly each situation and creditor is unique and will all seek the best outcome for themselves.
Key suppliers and customers must retain confidence in the business and communication is the key if a rescue is to be successful.
Support for the finance team in corporate turnaround
Financial distress can place incredible pressures on finance teams who often bear the brunt of creditors demands and yet are not equipped to deal with the process
required to manage a turnaround. Often these situations show inadequate financial processes, planning and reporting to directors and managers charged with managing turnarounds.
Corporate-911 will provide an end-to-end evaluation of the financial management processes supporting the turnaround. This includes monthly reporting, cash flow and
profitability forecasts, supplier payment management and communication to treasury managers and communication with bankers and financiers. We also evaluate working
capital management in receivables and payables. We will provide actionable plans to address these weaknesses and if required monitor and evaluate the implementation
of these plans.
We help develop the immediate austerity plans and the longer term sustainable cost reduction plans required to return to financial health.