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Deloitte CRG Newsletter
The Deloitte Corporate Restructuring Group (Deloitte CRG) Newsletter addresses the current state and outlook for the Deloitte CRG practice, including recent engagements, announcements, case studies, and upcoming events.
Start the next chapter right: Fresh Start accounting insights
Emergence from bankruptcy is a complex and demanding accounting challenge. Discover five Fresh Start accounting insights that provide guidance to navigate chapter 11 under the ASC 852 reorganization process. These actionable insights can help management complete the process more efficiently so they can move forward and focus on the operations of the newly reorganized business.
Working capital solutions for companies with urgent cash needs
Implementing a liquidity management and mitigation program will be critical to providing short-term cash needs in the face of declining sales prospects. In certain cases, the scale and urgency of the short-term working capital requirements of our clients have taken the company’s management team by surprise, emphasizing the need to act decisively in a resilient workforce and thrive in a virtual environment.
Addressing the liquidity impact of COVID-19
Supply chain disruptions and travel restrictions caused by the spread of COVID-19 are resulting in significant operational and financial problems for many companies. We explore liquidity planning and credit management options for companies with urgent cash needs.
Based on an increased focus due to the impacts of COVID-19, a multi-billion dollar transportation company recognized an opportunity to improve its cash conversion processes and engaged Deloitte CRG to help it improve its working capital performance. With a target of more than $500 million in savings, the increased cash can allow the company to make other strategic investments and technology upgrades.
Clothing retail chain
Deloitte provided bankruptcy accounting, financial accounting and reporting, valuation, tax, process and systems services to a large retailer with a significant number of North American locations. Our efforts were key in assisting the company to sell off the majority of its assets and operations as well as spin off a large portion of its real estate into a new Securities Exchange Commission-registered reporting entity.
SaaS Technology Company
Deloitte CRG serves as financial advisor to a private equity–backed technology company that has integrated multiple acquisitions over the last year. The company has engaged Deloitte CRG to help them focus on identifying and achieving working capital improvements across the business focused on the procure to pay and order to cash processes. An initial assessment identified up to a 30% improvement opportunity to reduce their accounts receivable (AR) balance and up to a 50% opportunity to increase accounts payable (AP). To date, the company has achieved a 10% reduction in AR and a 30% improvement in AP.
Engineering and construction company
Deloitte CRG assisted the executive management team in evaluating strategic alternatives around the issues of operating challenges and management changes that the company was facing, as well as potential sale scenarios. Additionally, Deloitte CRG helped the financial management team with analyses to isolate root causes of underperforming projects, evaluate liquidity sufficiency and bonding capacity needs, and elevate the quality of financial performance. The supporting analysis work shifted to assist management in the company’s needs of diligence responses to interested buyers. Further analysis of long-term incentive plans led to better retention during the sales process. Deloitte CRG remains an adviser to the executive management board around complex issues.
Strategic aviation lending syndicate
Deloitte teams from the United States and Europe were retained by the lending syndicate (located in London, Paris, New York, and Toronto) to a large global aviation finance company, reeling from the impact of COVID-19 and choking off 90% of its income, and the precipitous downturn of the airline industry. Working closely with counsel, Deloitte assisted with restructuring negotiations on behalf of these lenders and between the lenders, bondholders, shareholders, and borrower. Our ability to bring to bear specialist industry sector experience, contingency planning, and deal implementation experience was pivotal in achieving an effective outcome for our clients.
Pursuant to its obligations under the Credit Agreement Amendment, the company engaged Deloitte CRG to provide services as the company’s chief strategic officer (the CSO). Deloitte CRG will work collaboratively with management and the company’s investment banker, coordinating with the company’s other restructuring professionals, attorneys, and financial advisors to assist in implementing selected restructuring strategies, including; assessing the company’s business plan and operations to identify potential performance improvement initiatives, developing and implementing the company’s financial and operational turnaround strategy and associated activities, overseeing the management of the company’s liquidity issues, and managing the relationship with the company’s lenders and creditors.
Deloitte CRG currently serves as the advisor to a manufacturer and its international union as they shut down a joint training and human resources center. Deloitte CRG has developed a work plan and cash flow estimates / budget for the wind-down period and advised the client on various wind-down matters, including, asset sales and transition, document and information retention, and contract disposition.