The Restructuring Services team offers lending reviews, formal insolvency, liquidations, receiverships, wind-down and closure support plus debt and capital restructures, and turnaround services.
Deloitte’s Restructuring Services team combines expertise across the firm to deliver valuable corporate restructuring advice.
The administration process aims to rescue a company or ensure survival as a going concern. Formal administration typically follows a period of planning to maximise stakeholder returns, either through a sale by the administrator or a company rescue through a Deed of Company Arrangement (DOCA).
Deloitte advises companies and their lender stakeholders when to enter into an insolvency process due to trading and cash flow difficulties.
Our expertise covers a wide range of businesses, from small enterprises to large multi-jurisdictional corporations. We work closely with specialist lawyers and valuers in all trading administrations to ensure assets are maximised to obtain best value for a distressed business.
A bank or other creditor holding appropriate security may consider appointing a receiver or a receiver and manager to sell the business or assets and use the proceeds to settle, wholly or partially, its secured claim.
Our expertise includes:
- Advising secured creditors in pre-receivership planning
- Acting as receiver and/or manager under circulating and non-circulating security interests
- Managing the business
- Selling the business as a going concern
- Realising assets at the best price.
Court appointed receiverships
Occasionally an application may be made to the court for the appointment of a receiver in case of a dispute between shareholders or partners, or where security is in jeopardy or the company is in default.
Our partners have previously acted as court appointed receivers of shares, companies, partnerships, and associations.
Liquidation provides a mechanism for the formal winding up of a company in a controlled manner.
At Deloitte, our experienced licensed practitioners will realise assets for the benefit of creditors. A liquidator will aim to:
• Dispose of the assets of the company
• Distribute the funds realised according to the statutory order of priorities among the company’s creditors.
If requested by creditors and other stakeholders, our liquidators can:
• Perform extensive investigations into failed companies
• Examine the conduct of a company’s directors and senior management
Solvent liquidations and corporate simplifications
Deloitte advises corporates wanting to dispose of entities using tax-efficient methods for distributing assets to shareholders where the underlying business is either ceasing or being restructured. In this case, Deloitte can help achieve the corporates’ main objectives to:
• Realise the company assets
• Resolve all outstanding company matters, including the settlement of claims of all creditors
• Distribute surplus assets to stakeholders.
Our team assists in all stages of the solvent liquidation process. We act as liquidators of solvent companies, initiating and finalising liquidations in a timely and appropriate manner. If a company is no longer required by shareholders or the holding company, it may go into liquidation. Deloitte can help maximise the benefits achieved by this process. These include:
• Group simplification – eliminating dormant legal entities to achieve a more cost-efficient company structure
• Savings in audit and accounting costs
• Savings in management time preparing financial information, tax returns and annual returns
• Recognising and avoiding corporate memory loss
• Reducing the number of directorships held personally to improve corporate governance.
Commercial restructuring support
Rapid, commercially and financially focused decision making is essential in stressed situations such as a liquidity shortfall, an impending covenant breach, a financial restructuring or a cost-reduction program. Decisions depend on the availability of accurate and insightful information that the board and management can rely on.
Our team has expertise in supporting finance teams, management and boards to:
• Analyse the business financials, ensuring an interlock with operational metrics, to fully understand the key drivers of underperformance
• Identify improvement opportunities through detailed analysis of key commercial factors such as product and customer profitability, contract performance, customer acquisition costs, sales channel performance and store profitability
• Quantify and assess the financial impact of performance improvement plans
• Prepare financial baselines to measure and track the implementation of performance improvement plans
• Prepare business plans and forecasts that reflect expected business performance and embed specific action plans
• Enhance management reporting across your organisation to provide greater insights into business performance
• Design and align KPIs to business strategy
• Establish a ‘single version of the truth’ across your organisation, ensuring the business uses one set of numbers in which it has full confidence.
Our expertise extends across multiple industries, companies and jurisdictions. We work with businesses facing immediate problems and those with issues 12 to 24 months away, as well as underperforming subsidiaries of otherwise healthy companies.
We deploy dedicated senior teams who work with management to support decision making and ensure robust performance management. Where appropriate, we can draw on our breadth and depth of skills such as Deloitte Analytics and Business Modelling.
Short-term cash management
Where cash pressure is acute and requires active management to ensure short-term survival, we support the management team through:
• Rapid improvement of short-term forecasting to increase visibility of cash requirements
• Development of forecasting models
• Tapping all possible means of cash generation to ensure survival
• Effective short-term cash reporting for internal management and external stakeholders
• Coaching, advisory support and hands-on assistance
• Providing an independent view of cash requirements and cash management options.
Short-term cash management is often a necessary component in distressed situations to buy the time required to prepare, negotiate and execute a turnaround plan.
When a company breaches or expects to breach its financial covenants or has insufficient headroom on its banking facilities, it will need to negotiate with its lenders. This can be part of an overall turnaround plan or a stand-alone action when operations are sound but the company is highly geared.
Our distressed debt advisory team specialises in leading and supporting companies in negotiations with lenders and other key stakeholders.
Our team has the expertise to:
• Deliver an in-depth diagnosis of your company’s financing requirements, including a review of your business plan and an evaluation of stakeholder positions
• Provide comprehensive analysis of options, appraising achievable alternatives and exploring alternative fund sources
• Lead negotiations to agree alternative solutions for your company with creditors, their advisors and supporting lawyers, from initial discussions to full documentation of agreed deals.
The Restructuring Services distressed debt advisory team has strong relationships with bankers and specialises in distressed refinancing transactions.
Distressed companies need to proactively manage their stakeholders including lenders, equity providers, customers, suppliers, credit insurers, rating agencies, regulators and employees. Each group has different concerns and aspirations and providing appropriate information and messages is essential to secure their ongoing support.
During such periods, management faces multiple demands on their time and resources which are often outside its comfort zone and situational experience. Understanding the objectives of key stakeholders and providing appropriate support and advice is critical in underpinning agreement and implementation of a workable plan.
Our extensive situational experience is beneficial in advising and supporting management in achieving its goals. Our presence also brings reassurance to stakeholders who want to see the management team in ‘safe hands’.
In certain circumstances, Deloitte staff may be seconded directly to clients. This is particularly helpful for projects requiring both financial and operational skills. Our team works with CEOs and CFOs to complement our advisory roles to boards.
Wind-down and closure support
We give organisations strategy advice when a subsidiary, division, product, site or business in its entirety is to be wound down and closed. We work cooperatively with management and other stakeholders to evaluate the closure of underperforming companies or business divisions. We can review the closure options, devise a withdrawal strategy and manage the implementation.
Our services will not jeopardise reputations or stakeholder relationships, and at the same time will allow management to focus on remaining core businesses.
Deloitte provides a comprehensive solution that:
• Minimises risk
• Injects pace
• Optimises management focus
• Provides easy access to specialists
• Brings an objective perspective
• Maximises residual value
• Manages stakeholders.
We have a strong blend of practical, commercial, operational and financial skills as well as providing full project management and plan implementation. We liaise with your firm’s specialists in functional areas as required.
In restructuring situations it is often beneficial to introduce executives to the management team who bring specific turnaround/restructuring expertise and an objective, impartial perspective. Our Deloitte Executive Network (DEN) comprises experienced turnaround executives.
Deloitte will introduce you to a potential executive from a recommended short-list according to your requirements. The executive will negotiate terms directly with the client. Deloitte does not benefit by making the introduction. Each client will also be responsible for undertaking its own vetting process to ensure the executive is appropriate for the role.