Employing Restructuring Advisers To Help Save Your Company

Finding someone to help can be a real challenge for companies that find themselves in financial difficulties.

It's made more difficult if the directors/owners take the view that they know their business better than anyone else and infer from this that if they don't know the solution, then no one else will.

A second issue is trying to solve the situation alone, via a self-help route. It may be that research has revealed a number of options and in a situation of financial difficulty there is a temptation to latch onto the cheapest or first solution. Indeed, you are likely to think you can't afford help and as a result persuade yourself that the cheap solution is the right one. Not surprisingly a lot of companies fail if they have not sought advise.

In either situation eventually a squeeze on cash flow or pressure from creditors tends to be the catalyst that galvanises action and you are likely to start looking for a solution.

Who do you turn to for help when feeling as boxed in as this? What's needed is a business rescue adviser, but how do you go about the process of finding one from among the insolvency, turnaround, accounting and consultancy advisers?

Finding business rescue advisers is difficult. It requires a thorough vetting process to confirm they have suitable experience and offer a rescue process rather than selling only one rescue solution.

The rescue process should involve a thorough business review to identify a viable business that can emerge from the process, then developing and implementing an operational reorganisation and financial restructuring plan. One aspect of the financial restructuring plan will be how to deal with all the company's liabilities.

In addition to bank and trade creditors a key creditor is likely to be the HMRC (Her Majesty's Customs and Excise).

Far too often businesses are advised to enter a Time to Pay arrengement with the Revenue to deal with tax, VAT or PAYE arrears or to enter into a Company Voluntary Arrangement (CVA) to handle debts but without a realistic assessment of other demands on the company's cash.

Therefore, the first thing to establish is whether the adviser is selling something, or has a vested interest in the business pursuing a particular solution. Having established they are truly independent, the adviser will conduct a review to establish the core issues. This should involve looking at more than just the financial problems.

Following a thorough review the rescue adviser's methods should include developing a realistic forecast pulling together the results of its investgiation including updated accounts and a business plan.

It should demonstrate an understanding of where business is going to come from, ie what is going to drive sales towards the company, as well as how the company makes a profit out of servicing them.

It should also show a real comprehension of the company's strengths and weaknesses and be able to identify the right restructuring tools to support the business.

If the company in trouble is looking for help at a fairly late stage, for instance after receiving notice of a winding up petition in the High Court, and if the rescue adviser's review has established that the company is viable despite its current financial problems, the adviser should also show experience of High Court processes in order to be able to obtain an adjournment that will provide enough time to come up with a restructuring plan.

While it is possible to come to the rescue of a struggling business even at a late stage, the advice is to talk to the Revenue or creditors before they file a winding-up petition. There are a number of options for dealing with HMRC liabilities even if you can't pay.

Either way, support from business rescue advisers with broad commercial experience, not just insolvency, will help manage the process while at the same time helping find a realistic solution.

Most importantly they will work with you as part of your team and in the interest of helping a viable business to survive in challenging times.


Copyright (c) 2010 Alison Withers