Restructuring Emmanuel Phaneuf, M.Sc., CIRP, LIT Partner, R&R

Restructuring Emmanuel Phaneuf, M.Sc., CIRP, LIT Partner, R&R
Raymond Chabot Grant Thornton & Co L.L.P. September 23, 2016

Breaking down « restructuring »
What is « Restructuring » ? There is no « exact » definition… “Restructuring is a type of corporate action taken when significantly modifying the debt, operations or structure of a company as a means of potentially eliminating financial harm and improving the business1” 1-

Breaking down Restructuring
“A company may restructure as a means of preparing for a sale, buyout, merger, change in overall goals or transfer to a relative. Perhaps the business has a failed product or service and does not bring in enough revenue for covering payroll and debts. As a result, depending on agreement by shareholders and creditors, the company may sell its assets, restructure its financial arrangements, issue equity for reducing debt, or file for bankruptcy as the business maintains operations.”

From a marker’s perspective…
What does “Restructuring” mean while preparing for the CNIE 2016 ? What does the letter “C” stand for (in CNIE) ? What Competencies are related to Restructuring ? Ethical behavior and professionalism ? Insolvency philosophy and practice ? Insolvency law and practice ? Taxation ? General business law ? Financing ? Management business operations ? Financial analysis and reporting ?

Recognize/Identify the competencies tested, and apply the theory
The puzzle The theory/the concepts: Proposal CCAA Weppa Type of claims Collocation of claims Directors International mechanism Financial statements analysis Cash flow / Financing Right of ownership Etc. The competencies: Ethical behavior and professionalism Insolvency philosophy and practice Insolvency law and practice Taxation General business law Financing Management business operations Financial analysis and reporting Recognize/Identify the competencies tested, and apply the theory

I hardly know where to start…
A step by step approach (for the exam, at least) : The beginning The business plan formulation The restructuring strategy development The restructuring strategy execution

Steps in the Restructuring process
A step by step approach : The beginning… What is the context ? What are the concerns ? Who are the stakeholders ? My services are retained by whom ? Who am I ?

The Business plan formulation… 1 Critically evaluate the business and potential value as a restructured business 2 Develop vision and strategy for the restructured business 3 Identify and evaluate operational restructuring initiatives (e.g. repudiation of unfavourable contracts, sale of non-core assets, work force reduction), the structure and the BS 4 Develop business plan for restructured business The vicious circle

The restructuring strategy development… 1 Based on business plan, determine the appropriate capital structure 2 Based on the desired capital structure and valuation estimates, evaluate value and form of consideration to be paid to creditors 3 Develop creditor negotiation strategy 4 Formulate execution plan for the restructuring strategy

The restructuring strategy execution… 1 Negotiate the terms of the debt restructuring with creditors 2 Determine if a legal process is required 3 Carry out any operational restructuring initiatives (as required) 4 Source financing for the restructured business (as required) The vicious circle

A summary of the suggested approach… from a different perspective
The info available (and to be obtained) will define the strategy… Identify the appropriate mechanism Determine the best path forward Quest for information

Some information to obtain
A debtor, You, And… Market, industry, regulators, competition, jusridiction, customers Key players, stakeholders Assets (type, quantity, value, obsolescnce) Liabilities (trust, secured, unsecured, employees, preferred, etc) Key contracts Tax liabilities Btw….. In the real world: Imperfect and asymmetric information Under an exam conditions: Even worse… Though you should – AT LEAST – work with the information provided

Developing a Restructuring strategy… based on information made available
A point of view Companies and their advisors must be aware of creditors’ different agendas, financial positions, cost bases and levels of size and sophistication so that key bottlenecks can be identified and factored into the restructuring plan Robert Barnett and Brian Grant Credit Crisis Puts Focus on Out-of-Court Restructurings. The Journal of Corporate Renewal (June 2010)

Developing a Restructuring strategy… based on various considerations
The menu of alternatives must be considered relative to state of debtor’s financial health, the level of co-operation from key stakeholders, and the competence and will of management to navigate the restructuring. Some alternatives will make more sense at different stages. A restructuring strategy may involve pursuing multiple alternatives simultaneously.

Developing a Restructuring strategy based on debtor’s health
The debtor’s financial health Stress Loan non performance Distress Insolvent Death ? Or a better (expected) exit route ? Should the Restructuring strategies to implement be linked to the debtor’s financial health ?

What/Which point of view am I dealing with ?
A lender’s point of view A debtor’s point of view Financial review or “looksee” Forbearance or accommodation Lender Sale of debt Creditor-initiated restructuring Security enforcement (receivership) Cash flow improvements Refinance Distressed M&A transaction Debtor Informal debt restructuring Formal debt restructuring Liquidation

ANY QUESTIONS ?

Help me please… BIA CCAA Directives and circulars
Standards of professional practice Rules of professional conduct Etc.

What’s the purpose of the BIA / CCAA ?
The philosopher What’s the purpose of the BIA / CCAA ? Balancing of interests From punishment to sanctions and rehabilitation Rights and responsibilities of interested parties Collective rather than individual actions of creditors Creditors’s right Conducted expected of debtors and creditors Etc. What’s the purpose of restructuring ?

The ABC’s of the FS’s analysis
WHY ??? To Identify and evaluate the factors affecting the quality and accuracy of reported financial information and adequacy of disclosure Assumuptions Age of historical financial information Competence of management Nature of financial information Risk of misstatement Internal controls

WHY ??? To assess the managerial accounting « system » Quality of the management information systems The availability of the information (by segment…) Allocation of costs Costing information Usefulness of information

WHY ??? Forecasting and budgeting Assess the reasonableness of assumptions Perform sensitivity analysis Analyze the alternatives Performance assessment Speed of reporting Comparison of actual to budget Variances Reasonableness of assumptions

The abc’s of the Balance sheet The current assets / liabilities The nature of the assets/liabilities The working capital Possible set off Book value, market value, orderly liquidation value Etc. LT assets / liabilities Off book liabilities (ex. environment) Assets pledged ? (free assets ?) The Equity (dividend, subscribed but not paid) Ratios

The abc’s of the Profit and loss Factors affecting the profitability Revenues Costs EBITDA

The abc’s of the Cash flow / Projected cash flow Revenue vs cash The assumptions… Assess the risks / strategies

Importance of Liquidity – cash is King
Point of view In the past, meeting additional liquidity requirements depended on convincing existing lenders that it was in their best interests to provide short-term financing for the restructuring. However, due to the credit crisis, financial challenges facing lenders and the diverse makeup of creditor groups, this is generally no longer a viable option in most situations. As such, it is more important than ever for companies to manage their cash flows, anticipate future cash requirements and operate as close as possible to a neutral or positive cash position. Given that lenders are keenly focused on their capital positions and are ultrasensitive to increasing loan exposure, creditors are much more likely to support a restructuring plan that doesn’t require funding support. In fact, running out of liquidity and requesting support can often precipitate adverse actions from creditors. Under these conditions, companies cut off from financial support are frequently destined for liquidation. As such, debtors must put themselves into survival mode. Any excess or nonessential assets should be sold, disbursements and incurred expenses should be minimized and all efforts to maintain positive liquidity and cash flow should be made. Robert Barnett and Brian Grant Credit Crisis Puts Focus on Out-of-Court Restructurings. The Journal of Corporate Renewal (June 2010)

Different types of Restructuring proceedings
??? Solvent Insolvent Formal restructuring (WURA, CCAA, BIA, …) Informal restructuring

Advantages of different types of restructuring proceedings

Disadvantages of different tyoes of restructuring proceedings
A question : is it enforceable against third parties ??

The available tools (mechanisms) for Restructuring…
Bankruptcy Notice of intent / Proposal / Arrangement (BIA, CCAA) Interim receiver Receivership Winding up Business corporation act (CBCA) Every situation is unique and requires a unique course of action (carefully thought through) Every mechanism have pros and cons and are coming with a toolbox

Key Ingredients while determining a strategy
Insolvent Debtor (assets are worth less than the debt/liquidity crisis). Determination of stakeholders and affected parties (who may be prejudiced and who will remain unaffected). Required approvals (secured creditor consent, debtor consent, regulatory approval, unsecured approval). Additional relief which may be required (i.e. termination of contracts, termination of employees, compromising of debt, changes to the corporate structure, asset sale, etc.). Evidence to support the need for an immediate close to the mechanism we want to put un place (i.e. funding/liquidity, negative effect on enterprise value, consumer confidence).

Overall comparison of BIA Proposal and CCAA Proceedings
Appendix N: Comparison of Restructuring Options (Core knowledge course)

Overall comparison of BIA Proposal and CCAA Proceedings

Key ingredients… Some useful provisions
Coming next… Key ingredients… Some useful provisions

Key Ingredients - Some useful provisions
Insolvent person may disclaim or resiliate commercial lease(s) S. 65.2 (1) BIA At any time between the filing of a NOI and the filing of a proposal, or on the filing of a proposal, in respect of an insolvent person who is a commercial lessee under a lease of real property or an immovable, the insolvent person may disclaim or resiliate the lease on giving thirty days notice to the lessor in the prescribed manner. Circumstances : If the court is satisfied that the insolvent person would not be able to make a viable proposal without the disclaimer or resiliation of the lease and all other leases that the lessee has disclaimed or resiliated Any damages / claims arisen from resiliation CCAA – similar provision under S.32

Key Ingredients - Some useful provisions (cont'd)
Disclaimer or resiliation of agreements (S BIA) A debtor in respect of whom a NOI was filed or a Proposal was filed may disclaim or resiliate any agreement to which the debtor is a party on the day on which the notice of intention or proposal was filed. Factors to be considered In deciding whether to make the order, the court is to consider, among other things: (a) whether the trustee approved the proposed disclaimer or resiliation; (b) whether the disclaimer or resiliation would enhance the prospects of a viable proposal being made in respect of the debtor; and (c) whether the disclaimer or resiliation would likely cause significant financial hardship to a party to the agreement. Similar provision CCAA S. 32

65.13(1) of the BIA Restriction on disposition of assets An insolvent person in respect of whom a NOI is filed or a proposal is filed may not sell or otherwise dispose of assets outside the ordinary course of business unless authorized to do so by a court. Despite any requirement for shareholder approval, including one under federal or provincial law, the court may authorize the sale or disposition even if shareholder approval was not obtained. Factors to be considered (4) In deciding whether to grant the authorization, the court is to consider, among other things, (a) whether the process leading to the proposed sale or disposition was reasonable in the circumstances; (b) whether the trustee approved the process leading to the proposed sale or disposition; (c) whether the trustee filed with the court a report stating that in their opinion the sale or disposition would be more beneficial to the creditors than a sale or disposition under a bankruptcy; (d) the extent to which the creditors were consulted; (e) the effects of the proposed sale or disposition on the creditors and other interested parties; and (f) whether the consideration to be received for the assets is reasonable and fair, taking into account their market value. Similar provision under CCAA S.36

Assets may be disposed of free and clear (7) The court may authorize a sale or disposition free and clear of any security, charge or other restriction and, if it does, it shall also order that other assets of the insolvent person or the proceeds of the sale or disposition be subject to a security, charge or other restriction in favour of the creditor whose security, charge or other restriction is to be affected by the order.

Court to hear report of trustee, etc. 59 (1) The court shall, before approving the proposal, hear a report of the trustee in the prescribed form respecting the terms thereof and the conduct of the debtor, and, in addition, shall hear the trustee, the debtor, the person making the proposal, any opposing, objecting or dissenting creditor and such further evidence as the court may require. Court may order amendment 59 (4) If a court approves a proposal, it may order that the debtor’s constating instrument (i.e. the minutes book, the corporate status, …) be amended in accordance with the proposal to reflect any change that may lawfully be made under federal or provincial law.

191 (1) In this section, reorganization means a court order made under (a) section 241; (b) the Bankruptcy and Insolvency Act approving a proposal; or (c) any other Act of Parliament that affects the rights among the corporation, its shareholders and creditors. Powers of court (2) If a corporation is subject to an order referred to in subsection (1), its articles may be amended by such order to effect any change that might lawfully be made by an amendment under section 173. Further powers (3) If a court makes an order referred to in subsection (1), the court may also (a) authorize the issue of debt obligations of the corporation, whether or not convertible into shares of any class or having attached any rights or options to acquire shares of any class, and fix the terms thereof; and (b) appoint directors in place of or in addition to all or any of the directors then in office.

Amendments to Articles 173 (1) Subject to sections 176 and 177, the articles of a corporation may by special resolution be amended to (a) change its name; (b) change the province in which its registered office is situated; (c) add, change or remove any restriction on the business or businesses that the corporation may carry on; (d) change any maximum number of shares that the corporation is authorized to issue; (e) create new classes of shares; (f) reduce or increase its stated capital, if its stated capital is set out in the articles; (g) change the designation of all or any of its shares, and add, change or remove any rights, privileges, restrictions and conditions, including rights to accrued dividends, in respect of all or any of its shares, whether issued or unissued; (h) change the shares of any class or series, whether issued or unissued, into a different number of shares of the same class or series or into the same or a different number of shares of other classes or series; (i) divide a class of shares, whether issued or unissued, into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof; (j) authorize the directors to divide any class of unissued shares into series and fix the number of shares in each series and the rights, privileges, restrictions and conditions thereof; (k) authorize the directors to change the rights, privileges, restrictions and conditions attached to unissued shares of any series; (l) revoke, diminish or enlarge any authority conferred under paragraphs (j) and (k); (m) increase or decrease the number of directors or the minimum or maximum number of directors, subject to sections 107 and 112; (n) add, change or remove restrictions on the issue, transfer or ownership of shares; or (o) add, change or remove any other provision that is permitted by this Act to be set out in the articles.

Removal of Directors 64 (1) The court may, on the application of any person interested in the matter, make an order removing from office any director of a debtor in respect of whom a notice of intention has been filed or a proposal has been filed if the court is satisfied that the director is unreasonably impairing or is likely to unreasonably impair the possibility of a viable proposal being made in respect of the debtor or is acting or is likely to act inappropriately as a director in the circumstances.

Stay of proceedings — notice of intention 69 (1) Subject to subsections (2) and (3) and sections 69.4, 69.5 and 69.6, on the filing of a notice of intention under section 50.4 by an insolvent person, (a) no creditor has any remedy against the insolvent person or the insolvent person’s property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy, (b) no provision of a security agreement between the insolvent person and a secured creditor that provides, in substance, that on (i) the insolvent person’s insolvency, (ii) the default by the insolvent person of an obligation under the security agreement, or (iii) the filing by the insolvent person of a notice of intention under section 50.4, the insolvent person ceases to have such rights to use or deal with assets secured under the agreement as he would otherwise have, has any force or effect, (c) Her Majesty in right of Canada may not exercise Her rights under (i) subsection 224(1.2) of the Income Tax Act, or (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that (A) refers to subsection 224(1.2) of the Income Tax Act, and (B) provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts, in respect of the insolvent person where the insolvent person is a tax debtor under that subsection or provision, and (d) Her Majesty in right of a province may not exercise her rights under any provision of provincial legislation in respect of the insolvent person where the insolvent person is a debtor under the provincial legislation and the provision has a similar purpose to subsection 224(1.2) of the Income Tax Act, or refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum (i) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or (ii) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection, until the filing of a proposal under subsection 62(1) in respect of the insolvent person or the bankruptcy of the insolvent person.

Limitation (2) The stays provided by subsection (1) do not apply (a) to prevent a secured creditor who took possession of secured assets of the insolvent person for the purpose of realization before the notice of intention under section 50.4 was filed from dealing with those assets; (b) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security against the insolvent person more than ten days before the notice of intention under section 50.4 was filed, from enforcing that security, unless the secured creditor consents to the stay; (c) to prevent a secured creditor who gave notice of intention under subsection 244(1) to enforce that creditor’s security from enforcing the security if the insolvent person has, under subsection 244(2), consented to the enforcement action; or (d) [Repealed, 2012, c. 31, s. 416] (3) A stay provided by paragraph (1)(c) or (d) does not apply, or terminates, in respect of Her Majesty in right of Canada and every province if (a) the insolvent person defaults on payment of any amount that becomes due to Her Majesty after the filing of the notice of intention and could be subject to a demand under (i) subsection 224(1.2) of the Income Tax Act, (ii) any provision of the Canada Pension Plan or of the Employment Insurance Act that refers to subsection 224(1.2) of the Income Tax Act and provides for the collection of a contribution, as defined in the Canada Pension Plan, an employee’s premium, or employer’s premium, as defined in the Employment Insurance Act, or a premium under Part VII.1 of that Act, and of any related interest, penalties or other amounts, or (iii) any provision of provincial legislation that has a similar purpose to subsection 224(1.2) of the Income Tax Act, or that refers to that subsection, to the extent that it provides for the collection of a sum, and of any related interest, penalties or other amounts, where the sum (A) has been withheld or deducted by a person from a payment to another person and is in respect of a tax similar in nature to the income tax imposed on individuals under the Income Tax Act, or (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection; or (b) any other creditor is or becomes entitled to realize a security on any property that could be claimed by Her Majesty in exercising Her rights under (B) is of the same nature as a contribution under the Canada Pension Plan if the province is a province providing a comprehensive pension plan as defined in subsection 3(1) of the Canada Pension Plan and the provincial legislation establishes a provincial pension plan as defined in that subsection.

Stay of proceedings — directors (1) Where a notice of intention under subsection 50.4(1) has been filed or a proposal has been made by an insolvent corporation, no person may commence or continue any action against a director of the corporation on any claim against directors that arose before the commencement of proceedings under this Act and that relates to obligations of the corporation where directors are under any law liable in their capacity as directors for the payment of such obligations, until the proposal, if one has been filed, is approved by the court or the corporation becomes bankrupt. Court may declare that stays, etc., cease 69.4 A creditor who is affected by the operation of sections 69 to or any other person affected by the operation of section may apply to the court for a declaration that those sections no longer operate in respect of that creditor or person, and the court may make such a declaration, subject to any qualifications that the court considers proper, if it is satisfied Provincial legislation 69.5 Regulatory body 69.6

Assignment of agreements BIA 84.1 (1) On application by a trustee and on notice to every party to an agreement, a court may make an order assigning the rights and obligations of a bankrupt under the agreement to any person who is specified by the court and agrees to the assignment. Factors to be considered (4) In deciding whether to make the order, the court is to consider, among other things, (a) whether the person to whom the rights and obligations are to be assigned is able to perform the obligations; and (b) whether it is appropriate to assign the rights and obligations to that person. CCAA S.11.3

Chair may admit or reject proof BIA 108 (1) The chair of any meeting of creditors has power to admit or reject a proof of claim for the purpose of voting but his decision is subject to appeal to the court. Accept as proof (2) Notwithstanding anything in this Act, the chair may, for the purpose of voting, accept any letter or printed matter transmitted by any form or mode of telecommunication as proof of the claim of a creditor. In case of doubt (3) Where the chair is in doubt as to whether a proof of claim should be admitted or rejected, he shall mark the proof as objected to and allow the creditor to vote subject to the vote being declared invalid in the event of the objection being sustained.

Creditor may require trustee to elect to exercise power BIA 130 Notwithstanding subsection 128(3) and section 129, the creditor may, by notice in writing, require the trustee to elect whether he will exercise the power of redeeming the security or requiring it to be realized, and if the trustee does not, within one month after receiving the notice or such further time or times as the court may allow, signify in writing to the creditor his election to exercise the power, he is not entitled to exercise it, and the equity of redemption or any other interest in the property comprised in the security that is vested in the trustee shall vest in the creditor, and the amount of his claim shall be reduced by the amount at which the security has been valued.

Trustee shall examine proof 135 (1) The trustee shall examine every proof of claim or proof of security and the grounds therefor and may require further evidence in support of the claim or security. Determination of provable claims (1.1) The trustee shall determine whether any contingent claim or unliquidated claim is a provable claim, and, if a provable claim, the trustee shall value it, and the claim is thereafter, subject to this section, deemed a proved claim to the amount of its valuation.

Interim receiver What’s an interim receiver ? The appointement of an interim receiver…. When ? Under « 3 » circumstances : 47.1 (1) If a notice of intention has been filed under section 50.4 or a proposal has been filed under subsection 62(1), the court may at any time after the filing, subject to subsection (3), appoint as interim receiver of all or any part of the debtor’s property,

Interim receiver What’s an interim receiver ? The appointement of an interim receiver…. When ? Under « 3 » circumstances : 46 (1) The court may, if it is shown to be necessary for the protection of the estate of a debtor, at any time after the filing of an application for a bankruptcy order and before a bankruptcy order is made, appoint a licensed trustee as interim receiver of the property or any part of the property of the debtor and direct the interim receiver to take immediate possession of the property or any part of it on an undertaking being given by the applicant that the court may impose with respect to interference with the debtor’s legal rights and with respect to damages in the event of the application being dismissed.

Interim receiver What’s an interim receiver ? The appointement of an interim receiver…. When ? Under « 3 » circumstances : 47 (1) If the court is satisfied that a notice is about to be sent or was sent under subsection 244(1), it may

International National YOU MUST RECOGNIZE IT…

International The concept of COMI in the absence of proof to the contrary, a debtor’s registered office Some definitions foreign court means a judicial or other authority competent to control or supervise a foreign proceeding. foreign main proceeding means a foreign proceeding in a jurisdiction where the debtor has the centre of the debtor’s main interests. foreign non-main proceeding means a foreign proceeding, other than a foreign main proceeding. foreign proceeding means a judicial or an administrative proceeding, including an interim proceeding, in a jurisdiction outside Canada dealing with creditor’s collective interests generally under any law relating to bankruptcy or insolvency in which a debtor’s property and affairs are subject to control or supervision by a foreign court for the purpose of reorganization or liquidation. foreign representative means a person or body, including one appointed on an interim basis, who is authorized, in a foreign proceeding in respect of a debtor, to (a) administer the debtor’s property or affairs for the purpose of reorganization or liquidation; or (b) act as a representative in respect of the foreign proceeding.

US Bankruptcy Code Chapter 7 – Liquidation Chapter 11, 12 & 13 - Reorganization Chapter 15 – Cross-border insolvency

Collocation order / Scheme of distribution/ Who ranks first, second, third, fourth, fifth, … Government claims Employees Suppliers / Farmers Others: Secured creditors Preferred creditors Construction lien Property taxes

Collocation order (scheme of distribution/who ranks first, second, third, fourth, fifth, …) Government claims / Crown interests (S BIA) Legal instruments (rely on several acts) The Crown claims (DAS) – the famous deemed trust S.227(4) ITA The employees’ part only… S86(2) BIA or both parts ?? Immovable security registered before the « birth » of the claim (per rules) Excise tax act Statutory crown securities S.87(1) BIA A security provided for in federal or provincial legislation for the sole or principal purpose of securing a claim of Her Majesty in right of Canada or of a province or of a workers’ compensation body is valid in relation to a bankruptcy or proposal only if the security is registered under a prescribed system of registration before the date of the initial bankruptcy event. No obligation to carry out marshalling

Collocation order / Scheme of distribution/ Who ranks first, second, third, fourth, fifth, … Employees Salaries / Vacations Pension plan What the « heck »……. about the WEPPA ??? It is a nice program… or a nightmare (since 2009) Is it relevant whist restructuring Aiming to compensate (almost) any employee’s losses Subject to a security provided in the BIA They step in the employees’ shoes

Collocation order / Scheme of distribution/ Who ranks first, second, third, fourth, fifth, … Suppliers / Farmers Do the provisions apply ? Others: Secured creditors Preferred creditors Construction lien Property taxes

BIA 95 – Preferences 96 – Transfer at undervalue 97 – Protected transactions 98 – recovering proceeds Inquiry into dividends and redemptions of shares Is there an impact while restructuring ??

Varia Directors Stay of proceedings ? First charges ? D&O Insurance ?
Discharge in favor of third parties Related person / Related claims What if you do not succeed Link between LFI-LACC Tax as an asset / Tax as a liability / Tax attributes

Others To vote or not to vote ? What does a proposal/ an arrangement look like ?

Elements of a successful restructuring
The financial and operational problems of the debtor are identified early in the process. The debtor needs to understand: What went wrong? Why it went wrong? How it can be addressed? Whether it can be addressed? The debtor has the ability and resources to execute a plan Controlling cash and having liquidity during the restructuring is crucial. A restructuring often needs to address underlying problems with the operations of the debtor’s business, not solely overburdening debt levels. If the problems with the operations are not corrected, a balance sheet fix will only be temporary solution. The debtor maintains good (and appropriate) communications with stakeholders throughout the process. Stakeholders have confidence in the integrity and capabilities of management.

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