RESTRUCTURING & TURNAROUND 

Formal restructuring

We help companies and their teams to navigate through the most difficult and challenging business processes they will ever face. This type of restructuring, commonly known as the US-type of Chapter 11, is often considered as make or break. Most of the companies deciding to go through this process are like on a highway without exits, without a real possibility of turning back. You either reach your destination (successful restructuring process) or you end up in a bankruptcy (failure). Ability to focus on both the big picture and the tiny details is critical. This is a rather complex process and has many risks that have to be managed carefully. DRS has extensive experience in the techniques and strategies that need to be deployed for a successful restructuring.

Formal restructuring is appropriate when a business is relatively complex and has a high risk of adverse creditor action. It is a process where the company seeks court protection from creditors while it reorganizes its business and debts over a period of time. In the European Union, this process is supported through the Regulation (EU) 2015/848 of the European Parliament and of the Council on the Insolvency Proceedings, with individual member states deploying their own legal frameworks, which deal with restructurings at the individual jurisdiction level. In Slovakia, for instance, this is done through the Act No. 7/2005 Coll. Bankruptcy and Restructuring Act.

In our experience, a company can reduce its old debts by well over 50%, with some of the Clients from the DRS portfolio achieving as much as 97% debt reduction. See our case studies to learn more about real-life cases.

Formal restructuring involves certain steps required under internal and informal restructuring plus the following:

• Engagement of an approved and carefully selected Trustee;
• Preparation of Trustee’s opinion;
• Preparation of court filing;
• Managing of information leaks before the filing;
• Court filing;
• Customer and supplier PR to mitigate risks after filing;
• Enforcement against unlawful supplier (or creditor) actions;
• Managing supplier action in jurisdictions outside the court protection;
• Creditor groupings for purposes of preparation of creditor plans;
• Preparation of the restructuring plan;
• Roadshows to present plans to creditors;
• Individual creditor negotiation;
• Preparation of formal agreements.

Informal restructuring

As an experienced, reputable and outside partner, we are set for achieving much better results in negotiations between debtors and creditors. This approach is similar to a court-approved (formal) restructuring, but without involving the court and trustee. The business is analysed, key areas of debt restructuring are identified and a restructuring program is prepared to significantly reduce the existing debts of the company.

It may involve some of the steps required under internal restructuring, plus the following:

• Preparation of business plan showing the potential of the business;
• Preparation of pre- and post-restructuring balance sheets and cash flows;
• Creditor analysis;
• Preparation of creditor proposals and plans;
• Road shows to present plans to creditors;
• Creditor negotiations;
• Drafting of new agreements with creditors.

This type of restructuring is of medium risk to the company as it is confidential.

See our case studies for examples of how this was achieved in various projects led by DRS.

Internal restructuring

We help companies to direct the course during the turnaround process and accelerate change.

Also referred to as organizational restructuring or turnaround, is a set of processes and actions required to improve the general state of the business or performance of individual divisions. The most critical factor is the right mindset of the owners and management, who have to realize that trying something different is far better than continuing the status quo and risking the life of the company.

In most scenarios, the core objective of internal restructuring is reduction of indebtedness. DRS will analyse the financial and operational aspects of the company and seek ways to reduce the debt burden without direct creditor negotiations (informal restructuring) or court filings (formal restructuring i.e. Chapter 11). This is usually achieved through:

• Increase of operational efficiencies;
• Reduction of direct and operating costs;
• Renegotiation of key contracts;
• More aggressive and competitive procurement practices;
• introduction of better and more relevant KPIs.

In many cases, and depending on the type and level of partnership, an integral part of organizational restructuring is interim or shadow management. We are ready to step in and help business owners or senior managers to deal with specific tasks or crisis situations, at the same time allowing the management to deal with value creation activities.

Internal restructuring carried out by DRS is:

• Informal and confidential;
• Offer low risk when compared with other restructuring methods;
• In many cases can be very quick; and 
• If well timed, often can prevent companies from going down the road of formal restructuring.

See our case studies for examples of how this was achieved in various projects led by DRS.