I agree fully that 6.4% of successful re-structures is far from acceptable. Unfortunately banks are in the position whereby they have no choice but to protect their interests in a distressed situation because the value of any business dissipates very quickly as soon as any incident of insolvency occurs – customers change supplier, suppliers stop supply, staff walk out etc etc.
In the course of our re-finance dealings we have structured the re-financing of companies that are facing difficulty leveraging off a quality insolvency practitioner’s opinion that a DOCA will with reasonable expectation get approved.
By this statement being issued we have structured finance to take out the existing lender PRIOR to administration (thereby removing the banks’ ability to appoint a receiver) enabling the company (planning to re-structure) to trade into the administration and then into the DOCA and to continue to trade when the DOCA has been approved. It’s a lot of work but it can be done and we have lenders who will support this style of re-structure.
Using this structure the fundamental underlying business can be saved to enable a formalised turnaround to happen. Providing we can establish from a technical perspective that the security of the incoming lender is protected satisfactory the chances of a re-structure can increase.