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Turning distress into opportunities

by Nejc Novak, LL.M. (UCL) / Insolvency and restructurings /

First half of 2020 has been symbolized by spread of coronavirus together with its health and safety concerns. Economic outlook is uncertain, and it is not yet entirely clear what the extent of the economic consequences will be. Inevitably, certain businesses will find themselves in serious financial and business distress.

The legal system offers tools for dealing with insolvency. In case of expected insolvency preventive restructuring procedure enables debtors to secure a court-approved stand still and ample time for negotiations with the creditors. In case companies are already insolvent, both debtors and creditors may initiate compulsory settlement. One man’s hardship is another man’s opportunity. Investors may wish to investigate NPL and other distressed assets acquisitions.

Through years of experience, Nlaw has developed its unique approach to restructuring of distressed companies. Understanding insolvency is crucial to every turnaround practice. Each company is unique, and insolvency is a two-layer issue: financial and legal. Together with our financial experts we study and investigate the state of the undertaking to understand the underlaying business and reasons for insolvency. Law should offer supporting pillars of any restructuring plan.

Saving companies for the sake of saving them is irrational. Therefore, it is critical to identify the opportunity. There might be a healthy core in the company, a discounted asset price may represent a good buy opportunity. We identify the opportunity and we analyse the possibilities to seize it. Understanding where the potential value for future growth lays is vital for successful restructuring.

Each restructuring is a multiple stage process, which requires a well thought strategy. Understanding the fundamentals needed to achieve the turnaround of a troubled business and identifying commercial opportunities help us maximise recovery for all stakeholders and protect residual value, whether that means its brand, reputation, intellectual property, or other tangible assets. We think and research what is the optimal way to achieve the goal.

Years of restructuring experience and fresh memories of the last financial crisis enable us to execute the plan efficiently and with precision. Our team can act quickly and is able to process vast amounts of documentation overnight, as well as quickly produce transaction documentation. That enables our lawyers and our clients to focus and the meaningful elements of the deal to achieve optimal returns.