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Pre-IPO Advisory

Debts Restructuring

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What is debts restructuring?

Debts restructuring means how financially distressed companies restructure their debt contracts.

When a company is unable to meet its financial obligations to creditors, it has several options such as liquidation, debt reduction, capital reduction, refinancing, assets injection and vulture investors.

Choosing the best options, and making it work, poses significant challenges. We can help you tackle the complicated legal, tax, and accounting issues involved. Our steps are as follows:

Our Steps

1.	Review the current financial status
2.	Identify all the creditors' claims
3.	Identify the directors and management's responsibilities and liabilities involved
4.	Review the legal and execution aspects of the debts
5.	Rank all the creditors according to its priority
6.	Formulate the restructuring plan
7.	Negotiate with various parties
8.	Conclude the restructuring arrangement

From our experience, in many cases, the Management of financial distressed companies is too panic, thus lose focus and creativity in handling liquidation case. Our experienced professional can help you solve the problems steps by steps, we find that management too often overlooks the following points when facing corporate bankruptcy

Matters commonly overlooked during financial distress

1.	The legality of claims from creditors
2.	The practical aspects of execution by creditors
3.	The legal procedure involved for different claims, some may involve director's personal liability, some may involve criminal offence.
4.	The duration involved for execution of legal process
5.	Banks' willingness to consider restructuring plan
6.	Interests from new investors e.g. buyout from investment funds or competitors

Advantages of bankruptcy

Bankruptcy order is not necessarily bad. The bankrupt order provides the following advantages to the company.

1.	Allow companies to reject some agreements or executory contracts
2.	It is excused from paying, or even accruing, interest on most of its debts
3.	Access to relatively cheap financing from new lenders who are granted "superpriority"over existing creditors
4.	A reorganization plan can be approved without creditors' unanimous consent
5.	Debts settled by relevant insurance or protection scheme such as staff cost settled by through labor department
6.	Company is in the best position to negotiate with its existing creditors