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Financial Distress and Debt Restructuring

Many businesses, at some point in their trading life, are faced with financial or economic distress or potential insolvency. These situations require practical solutions aimed to quickly reduce costs, and increase cash flow. Sometimes insufficient access to funding or liquidity issues may also have a negative impact on business operations.

There are various ways of addressing this in order to minimise the erosion of the business’ performance. This can be achieved with an immediate focus on strategy and operational improvements to the business.

Some of the most common options generally available to businesses in financial distress are:

  • negotiating new contract terms with creditors;
  • negotiating new contracts with new creditors; or
  • allowing the business to be liquidated by an appointed liquidator.

Already in financial distress?

If your business is already in distress and is subject to formal demands for payments by a bank, or subject to any other legal claims, one of the ways of dealing with the situation is to privately negotiate and arrange the restructuring of business debt with the bank or with alternative lenders and investors.

Some of the most effective solutions are to:

  • restructure the debt on more favourable terms;
  • reduce interest payments and/or principal amounts;
  • extend the maturity of the credit facility;
  • substitute security for the debt; or
  • consolidate or divide the existing debt.

How we can help

Our banking and finance lawyers deliver restructuring solutions designed to build a platform for swift recovery of your business. We thoroughly assess all options, assist you in accessing expert advice from specialists in commercial finance, and negotiate with your bank to agree a viable plan of action.

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