Week 5 literatuur

Question 1

Artikel w5 J.A. Adriaanse

Answer 1

Informal reorganization takes places outside the statutory framework and is in the shadow of the law with the objective of restoring the health of the company within framework of existing legal entity. In the reorganization plan here will be business restructuring and financial restructuring.

Business restructuring (restore operational profitability)

• Stabilizing
  Identifying critical problems that need immediate action. Goal is increasing cash flow.
• Analyzing
  Plan for the long and the short term
  Set forth the core activities of the business
  Consideration to what products/services and customers can be retained
• Repositioning
  Initiate the reorganization seth forth in the plan
• Reinforcement
  Reinforcing in the field of management as well as in the company’s balance sheet
  Passen het management en organisatiestructuur bij nieuwe bedrijf? (Mogelijk positiewijzigingen, ontslaan etc)

Question 2

Advantages of informal reorganisation

Answer 2

Flexibility: Less rigid reorganisation then when it’s formal. Tailor made solutions can be elaborated.

Silence: Procedure not made public. Public procedures have the effect that stakeholders are reserved to enter a new contract. Also a “race to collect can then not develop (creditors tumbling over each other).”

Control: During informal reorganisation management can continue to run the company independently (no judge in sight)

Question 3

Practical bottlenecks during informal reorganisation

Answer 3

• Management and the shareholders have a pasive attidude towards the informal reorganisation
• Insufficient strategic, operatioal and financial measures are taken,
• The company is unable to provide sufficient inside into the actual financial situation
• The company is unable to find risk bearing capital

Question 4

Disadvantages of informal reorganisation

Answer 4

• Hold out problem
  Creditors may prevent a worlout deadl and they cannot be forced to agree due to the consesnusal nature of out of court composition
• No ring-fencing of new monies
  New funding cannot be prioritized on a legal basis making it unattractive to provide bridge funding.
• Enforcement actions
  There are no possibilities for a “cooling off” period in which enforcement actions cannot take place

Question 5

Negotiating principles in workout situations

Answer 5

-Seperate the people from the problem

• Interest vs positions I(avoid taking and defending a position but rather focus on different parties interests)
• Generate lots of options
• Use objective criteria (rather than judgement of either party)