Contingency Planning & Insolvency has been saved
Contingency Planning & Insolvency
Helping stakeholders understand the alternative options and achieve the best outcome
Stakeholders often need a “plan B” in case their preferred solution falls through. That’s why contingency planning has become even more important, with many businesses navigating sectoral volatility and distress.
While the causes of financial distress may differ, experience has shown the benefits of appropriate contingency planning in terms of value preservation.
Contingency planning is aimed at minimising (as far as possible) the adverse impacts on a company’s business from sectoral or market stress.
Our Restructuring Services team has deep situational experience across a broad range of industries and will bring in additional sector specialists and subject matter experts, including tax, from elsewhere within Deloitte as required.
The breadth of insolvency skills of the Restructuring Services team enables Deloitte to design detailed and viable solutions which can be delivered across industries and processes. The fundamental elements of our approach are:
- Working alongside our advisory teams to establish alternative strategies;
- Identify key concerns and manage the stakeholders throughout the process;
- Work with tax and legal advisers to devise a practical implementation plan;
- If appropriate, plan for short notice procedures (pre-pack);
- Delivery of the insolvency based solution
Contingency Planning for Corporates
For directors, dealing with solvency issues can be extremely stressful especially given potential personal liability concerns.
A realistic assessment of the position is required together with an evaluation of the available options. Above all, directors should avoid the risk of sticking their heads in the sand.
Early dialogue with the company’s lenders may be appropriate in the event of potential or actual covenant breach.
Additional steps for a board to take in such circumstances would include taking professional advice including contingency planning in the event that agreement cannot be reached with the company’s financiers.
If caught early, this may result in the successful restructuring of the company or if not, and the company is forced into an insolvency process, then the board will have been seen to take appropriate action to protect value for creditors.
Contingency Planning for Creditors
Any party involved in restructuring negotiations will want to understand the implications for them if a consensual agreement for a refinancing or restructuring cannot be achieved.
For Lenders, this may include contingency planning to take control of the borrower in the event of deadlock with management or shareholders.
The situation is likely to be highly dynamic.
A period of contingency planning may therefore run in parallel to restructuring negotiations. Moreover the work streams are likely to be closely linked with the results of the contingency planning process informing the restructuring negotiations and vice versa.
In addition to our work in Ireland, we have extensive experience in undertaking Liquidity Reviews and IBRs of borrowers with cross-border, multi-jurisdictional solutions in conjunction with colleagues in Deloitte member firms worldwide.
Deloitte’s Global reach allows us to provide a full suite of available insolvency-based solutions in multi-jurisdictional zones to facilitate a preservation of value and a maximum return for all stakeholders.
Our full suite of services are supported by tax, financial advisory and real estate departments.
Recent client engagements:
- Appointed liquidator of the Arcadia Group Irish entities, to include TopShop and Miss Selfridge, maintaining operations of the stores for a number of weeks in December 20 to maximise creditor returns.
- Liquidator of Wirecard, an international payment processing business based in Germany, assisting in the orderly wind-down of the global business.
- Contingency Planning and subsequent Administration over an iconic NI bus manufacturing group, including sale of the business, realisation of non-core property assets and complex stakeholder landscape.
- Administration of a group of PE backed NI companies operating in the renewal energy sector, resulting in preservation and sale of the assets and accreditations.
Corporate Insolvency Statistics Q1 2021
Irish High Court approves proposed scheme of arrangement for the restructure of the Norwegian Air Group
Second successful airline restructure in Ireland through the use of Examinership legislation