Corporate Restructuring
Companies fall into distress for a wide range of reasons, including economic or sector-specific downturns, poorly executed acquisition strategies, a loss of one or more major customers, loan covenant violations, or other unforeseen events. Yet no matter how the company got into duress, one thing is certain - it must deal effectively with the crisis or face the risk of losing the business entirely.
Trenwith recognizes the urgency associated with distressed situations and possesses the resources necessary to quickly determine the viable options for solving the problem-whether it be through an out-of-court solution such as a negotiated debt restructuring or an in-court solution such as a plan of reorganization under the protection of the U.S. bankruptcy code. In either case, Trenwith's professionals have the experience necessary to create a timely and successful outcome.
Trenwith not only brings extensive transaction-related services to corporate restructuring clients, but also incorporates the operations-related services of over 70 financial recovery experts that are part of the BDO Seidman Financial Recovery Services ("FRS") group. The collaboration between Trenwith and BDO's FRS group provides clients with a multi-disciplinary team of senior professionals including Investment Bankers, CPAs, Certified Turnaround Professionals, Certified Fraud Examiners, financial analysts, statisticians and criminal investigators.
Bankruptcy
Trenwith's bankruptcy professionals have extensive experience assisting companies, creditors, creditor committees, equity committees, and other parties of interest in chapter 11 proceedings. In addition, Trenwith is able to draw upon the resources and Chapter 11 expertise of the 70 professionals in BDO Seidman's FRS group.
Trenwith's range of bankruptcy advisory services include the following:
- Plans of reorganization
- 363 sales
- DIP financing
- Valuation opinions and analysis
- Peer reviews
- Negotiation and recovery enhancement strategies
- Financial statement analysis and monitoring
- Expert testimony
Financial Restructuring
Trenwith's restructuring professionals have extensive experience in identifying, negotiating, structuring and executing the best possible solutions for its clients outside of bankruptcy court.
Trenwith is skilled in advising on the sale or purchase of all or certain corporate assets, refinancing, existing securities or raising new capital, renegotiating terms of major leases or with other major trade creditors. Trenwith can also use prepackaged or pre-negotiated bankruptcies to expedite restructuring transactions.
Trenwith's out of court restructuring services include:
- Recapitalization plans
- Debt to equity conversion
- Prepackaged plans or reorganization
- Creditor negotiations
- Cash flow modeling
- Take-out financing
- Distressed M&A
Distressed M&A
Distressed M&A candidates typically possess some, if not all of the following characteristics:
- Significant liquidity constraints
- Limited access to capital with current balance sheet
- Senior lenders restricting capital
- Declining operating performance
- Conflicts between the various constituents that hold claims or interests
- Going concern value exceeds liquidation value
- Covenant and/or payment defaults on debt instruments
The investment banking expertise required to efficiently navigate and execute a distressed M&A deal is highly specialized. These situations require significant knowledge of bankruptcy procedures, an understanding of the all elements of "acceptable" stalking horse protections (including current Bankruptcy Court precedent), as well as knowledge of each party-in-interest's respective rights and remedies. Where appropriate, a successful distressed M&A advisor must be able to articulate the benefits that can be realized by purchasing assets from a company in bankruptcy and address the concerns of bankruptcy-wary buyers.
There are several key factors that need to be considered when selecting a distressed M&A advisor:
The distressed M&A advisor must possess the credibility with senior claimants to obtain their support for the value-maximizing course of action. The sale process is often initiated by the creditors' desire to liquidate their claims in a struggling company that has little or no access to capital markets or represents a deteriorating credit.
A distressed M&A advisor must have the resources and experience to move quickly and be able to assess the trade-off between time and value. In many cases, distressed companies must be sold quickly before they run out of cash thereby leaving liquidation as the only available alternative. The goal of distressed M&A is to maximize the distributable value. As time passes, asset value may decline and claims may rise to fund operating losses.
A distressed M&A advisor must have the experience and savvy to navigate conflicts of interest, keep the transaction on course and minimize hostility. The consideration received from a buyer in a distressed company sale is often insufficient to satisfy all claims or interests in the company, creating a contentious zero-sum negotiating dynamic. For example, out-of-the-money constituencies may have incentives to derail a transaction's process, or management may have its own thoughts on a preferable transaction structure or acquirer.
Trenwith Securities' Distressed M&A team recognize that each situation is different. Consequently, we place a heavy emphasis on the importance of our team gaining an understanding of your business and the specifics of the situation at hand. Trenwith professionals have significant experience working within abbreviated time frames imposed by limited liquidity and have the resources and creativity to assist you in a distressed M&A situation