The restructuring of an organization; it may be necessary, to avoid bankruptcy or in preparation for a possible sale of a business. And that involves a few things. For example, changing a business structure takes time and you have to deal with various stakeholders. After all, each party involved has its own input. And together we should reach an agreement that is desired by all.
In this blog, we’d like to give you an inside look at restructuring and share how you can use the right tools to ensure that you bring every party along to the desired outcome.
Agreement of all stakeholders
When a restructuring is initiated, many stakeholders are involved such as: customers, employees, shareholders/participants, suppliers, financiers. This also includes the tax authorities and the landlord. Each stakeholder has its own position and interest in it. For example, the supplier wants certainty about its retention of title, the lender about its liens, and the tax authorities want to secure their lien on the ground.
A reorganization gets off the ground by asking various parties to think with us and jointly decide how best to keep the company afloat. That takes time and insight. All stakeholders want an understanding of their current position and an understanding of the time needed to reach an agreement with the parties.
Reorganize through a WHOA
A company may choose to reorganize through a WHOA (Homologation Private Agreement Act). This arrangement can be beneficial to the entrepreneur. He can ask the court to agree to a debt restructuring. Healthy companies can thus reduce high levels of debt and stave off possible bankruptcy.
Creditors are divided into classes. For example, lienholders or a supplier with retention of title. The majority within this class must agree to a settlement before the judge makes a final ruling on it.
Initiating a WHOA takes time. The cooling off period under this law is four months, which can also be extended for another four months. No money or property can be claimed during that period, but stakeholder positions may change during that time frame. Mainly those of creditors who have security interests in current assets, such as inventories and accounts receivable. It is then important to have a good understanding of creditors’ positions so that all WHO classes can make informed voting decisions. By bringing in knowledge specialists or using a tool like Smart Stock, positions can be properly mapped and monitored.
Better understanding of restructuring with the right tools
To get the right positions in view, we start with a 0 measurement of all assets within the company. From inventory to stock and accounts receivable to Intellectual Property Rights.
Dashboards such as Smart Stock and Smart Receivables are used to display the status of the company’s current assets.
In addition to current stock, Smart Stock provides insight into turnover, age, turnover rate, categorization and any supplier position over time. Smart Receivables does the same thing, but for accounts receivable. This shows the status of age, country risk, credit insurance coverage and payment terms.
Based on these insights, appraisers can determine the (liquidation) value of different asset classes. Smart Stock and Smart Receivables are designed to make restructuring easier. Each party gains and maintains insight throughout the process via a dashboard to get everyone along toward the desired outcome.
NTAB: restructuring expert
NTAB has gained extensive experience in settling hundreds of insolvency cases over the past decades. This has yielded a huge amount of data that comes in handy in valuations, as well as in the supervision of new bankruptcies. We are therefore well placed to take care of the various valuations, of which WHOA is also a part.
We are used to working quickly and well with the people within a company. Our specialists have knowledge of the systems of the company in question. Quickly rigging dashboards to provide desired information to stakeholders is our daily work.
By investing in a 0 measurement, everything can then be easily visualized via dashboards. Want to know more about this? Ask one of our colleagues.
