Restructuring your business is incredibly challenging while you’re facing a financial crisis. It might seem like a daunting process, but an experienced attorney from Bradford Law Offices can help.
If you don’t seek practical solutions to protect your company, serious problems can arise and negatively affect the future of your business. Losing cash and profits can lead to massive debt with no way out other than closing the business or filing for bankruptcy.
At Bradford Law Offices, we understand your struggles. We can provide the restructuring and turnaround services you need to survive and thrive. For a confidential consultation to learn more about how we can help, call (919) 758-8879 or contact us online today.
Understanding Corporate Turnaround and Restructuring
Restructuring and turnarounds are business concepts employed to protect businesses and prevent them from liquidating their assets.
A business turnaround is an informal action that involves improving a company’s financial recovery after a prolonged period of poor performance. A turnaround is an attempt to improve a business’s stability to secure its future. A turnaround is useful before a business fails.
Turnarounds require a hands-on approach and extensive knowledge of the company’s issues. Business owners must consider what changes are necessary to pull themselves out of their financial hole and develop a strategy to work toward their goals.
Restructuring is a more formal process. It assists businesses that are facing significant financial burdens and are on the brink of failure or have already failed. When a business restructures, it focuses on the capital structure, valuation of the company and its components, and cash generation and debt-carrying ability.
The process is more formal than a turnaround because restructuring often occurs when the business accepts voluntary administration in a bankruptcy proceeding. However, restructuring has the same goal of avoiding liquidation as a turnaround does. During the process, business owners can negotiate with creditors regarding their debts.
Components of Restructuring a Business
Corporate restructuring is a make-or-break solution focused on minor details and the overall bigger picture. Typically, business owners struggle with on-hand cash and require prompt action to resolve their financial issues.
When you hire Bradford Law Offices, we will work with you closely to develop and implement a restructuring plan suited to your needs. We can advise you of the available options and guide you through each step of the process, from business plan development to liquidity management.
Our team can handle various aspects of your business restructuring, including:
- Implementing cash conservation controls and guidelines
- Stabilizing operations
- Incorporating operational restructuring
- Facilitating communications procedures
- Developing and sensitizing business plans
- Evaluating revenue enhancement opportunities
- Developing and reviewing cost reduction initiatives and execution milestones
- Managing creditor negotiations
Businesses can benefit from having an interim Chief Restructuring Officer so the CEO can focus on the company’s daily operations and assist with the restructuring process.
Incorporating Compensation Programs into Business Restructuring
An executive compensation program is essential to restructuring a business. Bradford Law Offices can develop and defend necessary compensation programs to reward vital employees and executives, incentivizing and motivating them during restructuring.
Beneficial compensation programs can include:
- Key employee retention program – A key employee retention program (KERP) encourages valuable non-insider employees to stay at the company during the restructuring.
- Key employee incentive program – The Bankruptcy Abufferese Prevention and Consumer Protection Act (BAPCPA) prohibits companies from offering KERPs to insider employees. Instead, businesses can use a key executive incentive plan as an alternative bankruptcy protection plan.
- Post-emergence management incentive plan – Typically, there is no retentive value in equity awards granted pre-bankruptcy after restructuring a business. Companies might reserve a portion of new equity while exiting a restructuring to provide long-term incentive grants to employees. The process involves determining how much to devote to initial emergence and future equity grants, how to allocate them, and how to structure these awards.
- Severance program – A severance program is a valuable retention tool for businesses going through restructuring. They are often subject to negotiations with post-restructuring owners. Designing an effective severance program requires balancing market-competitive benefits with the overall potential cost.
Key Factors in Business Turnaround Services
Companies can build confidence among their shareholders, stakeholders, and creditors by focusing on their liquidity capital. With adequate cash management and distressed business planning strategies, boards of directors and management teams can feel confident about overcoming operational and liquidity challenges. An attorney whose practice focuses on turnarounds can provide guidance in these areas.
Bradford Law Offices can increase stakeholder confidence by designing a viable turnaround plan, expanding transparency through communications with creditors and investors, and establishing a new business plan for future success.
A turnaround should address the fundamental problems of a business from multiple vantage points. Focusing on marketing, financing, operations, pricing, and strategy is essential. Understanding what went wrong, how to mitigate those risks in the future, and finding ways to grow the business can facilitate financial growth.
Business turnaround management also assesses long-term financial arrangements, business plans, and the management team. You must be open to change so you don’t have to make the difficult decision of closing the doors to your company.
As a business owner, you won’t benefit from a one size fits all approach. The turnaround services you need will depend on the unique aspects of your company and the goals you want to achieve. Turnaround services can include:
- Reposition the company in its respective markets
- Restructuring high-interest debt
- Closing unprofitable lines of business in favor of cash-generating aspects of the company
- Selling assets
- Reducing the workforce
- Analyzing margins and pricing strategies
Secure the Future of Your Business
Financial distress is normal. Every business owner will encounter a crisis from time to time. It’s unavoidable. Shifts in the availability of financing, abrupt changes in market demands or conditions, and other factors can significantly affect any company.
You can prevent your crisis from spiraling out of control and costing you the future of your business. However, you must take swift action. When you work with an experienced business bankruptcy attorney from Bradford Law Offices, you will have a legal team providing the guidance and support you need to navigate the complicated restructuring and turnaround process.
We have over 25 years of experience working with distressed and underperforming companies. Our legal team can assess your situation and create a plan to improve your financial standing so your business doesn’t continue to suffer
Call Bradford Law Offices at (919) 758-8879 or contact us online for a confidential consultation to get started.