Restructuring? Be Prepared.
Give yourself enough time
The first thing to be aware of is how incredibly slow the credit process within banks has become. Whereas before, decisions were made in days or weeks, it can now take months. This is particularly true in difficult restructuring situations. It is therefore imperative that you start the review or restructuring process early.
Because the credit market has become so difficult, the chances of refinancing are slim. Therefore, concentrate your initial efforts on your current debt provider.
Before you even talk to your bank, you need to do your homework. Consider the following:
- Know your rights (the new Consumer Protection Code came into force in January); but also know your obligations, in terms of security and guarantees given.
- Understand what security the bank currently holds and be realistic about valuations. Also, look at the more technical details e.g. extent of cross security; does the debenture include a floating charge? are debentures ‘all sums due’?
- Assess the strength of your personal guarantees and again be realistic about valuations. Do you have unencumbered assets available to offer?
- Be transparent with your financial information – If you’re explaining you’re losing.
- Have a business strategy and support it with accounts and projections. Present them with a solution.
- Whilst cost reduction is important, have a strategy for sales e.g. new markets, new customers, new products. Have a story to tell!
- Note your achievements to date – They will make your future objectives more credible.
- Banks want their money back, so include debt reduction in your strategy, even if not immediate.
To discuss your restructuring options call George Delaney on 087 6299317 or email email@example.com