Is your business in financial distress?

Companies that are facing financial distress have a number of options available prior to formal insolvency proceedings and/or enforcement actions being required. Below are some of the common options but it is not exhaustive list:

• Financial restructure or refinance – this option involves renegotiating the terms of existing debt with creditors, such as extending repayment periods, reducing interest rates, or even writing off a portion of the debt. A refinancing involves obtaining new facilities to refinance the existing debt.
• Asset sale and M&A – the asset sale process involves the sale of non-core assets or divisions of a company in order to raise cash and improve liquidity. The M&A process involves the sale of the company (in part or in whole) and/or the sale of part of the business.
• Business performance improvement - implementing measures to reduce operating expenses, such as layoffs, salary cuts, reducing discretionary spending, or renegotiating contracts with suppliers. It could also involve improving operational efficiency, streamlining processes, and optimising resource utilisation to enhance profitability.
• Creditors’ compromises – this process is about negotiating with creditors and other stakeholders outside of formal insolvency proceedings to reach agreements on debt restructuring, payment plans, or other arrangements.