8) Advisory Services - Restructuring

Question 1

what are some reasons for financial distress

Answer 1

1) product becomes obsolete
2) industry decline
3) poor investment decisions
4) lack of innovation
5) operation disorganization
6) bad management
7) poor m&a
8) excessive leverage

Question 2

what are solutions to distressed company

Answer 2

restructuring company

Question 3

what is the primary question to ask before approaching a company for restructuring

Answer 3

is restructuring even a viable option q

Question 4

when is turnaround feasible

Answer 4

creditors can receive higher percentage of capital, if upside cannot cover the risk of restructuring, creditors will not go through with it

Question 5

when is restructuring succesfull

Answer 5

company can recover up to 70% of initial debt

Question 6

when is restructuring succesfull

Answer 6

creditors sustain additional losses

Question 7

what is the order of restructuring (asset restructuring)

Answer 7

1) sale of non core assets
2) lower capital expenditure
3) cut costs of existing business
4) sale of controlled firms/brands (marvel, Spiderman)

Question 8

what is the order of restructuring (debt restructuring)

Answer 8

1) suspensions of interest payments
2) debt write off
3) debt equity swap
4) introduction of convertible bonds

Question 9

what will creditors assets prior to restructuring

Answer 9

1) probability of default
2) the loss given a default
3) outcome of successful restructuring