Questions that Keep CFOs Up at Night

Distressed Business. Is it Worth it to Stay?

What’s in it for me? Am I better off quitting?In this CFO series post we focus on the officer, director or an employee at a distressed business who is wondering whether to leave the company or not.

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Dealing with a Financially Distressed Business?

How do I evaluate different financial and legal advisors? If a company hasn’t been through a selection process like this before, it may be tempting to simply go with its existing professional relationships. However, like in most areas of life, blind faith is generally inadvisable.

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Being a Decision Maker at a Financially Distressed Company

I am being advised to do inconsistent things by different professionals and Board members. How do I sort this out? A financially distressed company is faced with conflicting advice. How can the CFO, CEO and the Board navigate these challenges to make good decisions?

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My Company Is In Real Trouble

My company is in financial trouble. Where do I go to get advice? The typical sources available to management may be highly conflicted or otherwise problematic when a company becomes financially distressed. Lending banks may give advice targeted at getting their outstanding balances repaid. In-place lawyers and investment bankers may not have the requisite experience with financial distress. Or worse, their insolvency partners care a lot more about the well-being of their repeat creditor relationships than they do about a one-shot gig with a debtor. And most Board members haven’t been through the experience before.

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Signs Your Company May Be Distressed

Dealing with the prospect of financial distress is obviously unsettling. People can potentially lose everything they have worked for their entire lives. Risks abound, with cash crises, creditor pressures, employee defections, and so forth. In addition, professionals and others have their hands out for fees (going broke ain’t cheap) and companies should be rightly concerned about “agendas” that may differ dramatically from those of the company, its owners and its management.

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I Don’t Have Much of an Economic Stake. Why Not Just Give the Company to Creditors?

Why do I care what happens in the financial restructuring? Why not just give the company to creditors? One constant across a sea of distressed restructurings is that the various constituencies of a company will have differing views as to values and related parameters. After all, each is myopically focused on its own recoveries. Left to their own devices, these groups may squabble as long as they can.

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My Board is ultra-nervous about getting sued.

Every situation is different, and needs its own legal scrutiny. And we are not attorneys. But we will tell you that Board members will be inundated with many lawyers and well-wishers telling them that they need to sue for peace with the creditors in order to get releases. Many of these directors, particularly those who have never been through the distressed experience, will be rightly concerned.

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Are You the Canary in a (Coal Mine) Distressed Company?

How do I get others around me to understand we have a BIG problem? Denial is a very common reaction to financial distress. And the messenger is sometimes shot, or at least treated like Chicken Little. The first order of business should be to identify the timing and extent of near-term crises.

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What Happens If We Go Into Bankruptcy?

What happens if we go into bankruptcy? It depends on how well you and your team have planned, as well as the company’s accessible resources. If an illiquid company stumbles into chapter 11 with little preparation, it very well could end up being sold in a quick bankruptcy auction, or even liquidated. Adequate planning (and this also means addressing the problem as soon as possible) generally means that the decision to go into bankruptcy would be well-informed.

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Running on Empty – Cash Shortages

The company is running out of money quickly. What do I do? A cash shortage may be a symptom of a larger problem. The company needs to be stabilized, from a cash perspective – and otherwise. Until management creates a stable platform, the company will likely careen in a very bad direction. And if cash concerns and creditor crises are becoming overwhelming, management probably needs to engage financial help from investment bankers or other such professionals.

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