Non-judicial (including financial) restructuring

Holistic restructuring solutions

Ensuring long-term business profitability and liquidity.

In times of increasing competitive pressure on the market and turbulence affecting the entire economy from the COVID-19 pandemic, ensuring business profitability in the long term and current financial liquidity often become the key challenges for companies. Moreover, the way in which a business handles this challenge may have a direct impact on the situation of financing entities.

A timely assessment of the company’s situation, including identification of potential risks and the need for funding, the development of a restructuring/reorganisation plan, and the arrangement of talks with key creditors, in particular financial creditors, can stabilise the situation and reduce the threat of insolvency.

Insolvency involves generally lengthy judicial restructuring or bankruptcy. In these proceedings the company’s operating activities may be disrupted and its assets may be sold, in whole or in part, below market value.

In practice, this represents a lose-lose situation. Creditors can recover only a certain portion of their claims, and the owners of the business lose the capital they invested. The proceedings constitute a considerable inconvenience even for creditors secured with a collateral.

Non-judicial (soft) restructuring

Non-judicial restructuring (including financial restructuring), if initiated and carried out early enough, can produce the most notable effects for both business and creditors.

There are additional less tangible benefits, such as avoiding negative PR, stigmatisation of senior management or loss of know-how.

Soft restructuring focuses on dialogue and ongoing communication with creditors, translating into trust and increased chances of success. The key stages are an initial moratorium, a standstill agreement and a restructuring agreement.

Our lawyers have extensive experience and expertise in restructuring scenarios, gained in numerous cases representing either financing entities or companies in difficult business situations.

What to start with?

analysis of the company’s condition, including profitability, potential threats and funding requirements (i.a. financial and commercial projections);
legal review of financing agreements, contracts with business partners or clients, and other significant obligations of the company;
development of an initial recovery plan;
contact with finance providers and other key creditors (ongoing reporting);
negotiation of standstill agreements and subsequently a restructuring agreement, with key creditors;
sourcing additional funds for current operations.

How can we assist you?

support in the assessment of your company’s situation, including legal and tax due diligence of the entity or selected areas, in particular key contracts/agreements;
analysis of established security and assessment of the risk of its realisation, or court enforcement against other unsecured claims;
support in dealing with finance providers and other key creditors, including negotiations on debt restructuring or refinancing;
advice on selecting the optimal form of (re)financing and assistance in sourcing investors;
support in developing and implementing a recovery plan agreed upon with creditors.

What form of financing to choose?

The solutions we offer are tailored to the individual situation of a given business, so they will always depend on the nature of the case.

These may include:

a new tranche of equity financing;
bank debt financing (including a new credit tranche, re-financing or debt consolidation);
bond issuance;
private debt (including mezzanine financing);
sale and lease back;
obtaining public aid (including restructuring aid under the second chance policy).