Due to the present situation derived from the COVID19 pandemic, nowadays it is more important than ever to have a very clear understanding of the possible critical scenarios with clients and suppliers in order to avoid or prevent adverse situations in respect of contractual relations, financial position with your commercial clients or even your own company’s cash liquidity, programming ahead will guarantee continuity and therefore solvency.
It is therefore essential to implement an on going analysis of the executed contracts your company has with third parties, guaranteed payments and the structure of financial resources at short and long term in order to avoid any possible instances when payment obligations are not met, since this could generate severe financial tensions.
It is essential to act promptly and analyse the different options that may arise to solve the situation before it becomes a problem and worsen the company status to the point of endangering its business and also affecting your image.
Our firm offers help and advice in the different situations that may arise with regards to the most difficult tasks your company, partners, clients and suppliers may encounter in moments of crisis.
Corporate Law
In general terms every representative of the company must act with precaution, not only with regards to the continuity of the company but also must be agile and flexible when taking decisions at company level. Our corporate law department offers services and advice with special attention in:
- Diminishing Management risk responsibility by way of introducing measures in respect of the voluntary bankruptcy of the company in order to avoid sole and joint and severally liability in respect of the company’s debt;
- Defining pre-bankruptcy strategies;
- Flexibility with proceedings, convene and adopt corporate agreements, cancellation of payment terms and preparation of yearly accounts;
Renegotiation
The review and, if applicable, the renegotiation of contracts as well as altering your trade agreements standard forms and its terms and conditions are the first steps to take in order that your company is ready to face up to these adverse situations. As well as taking urgent measures immediately when required, the time has come to prevent breach of contracts due to force majeure or any other form of breach with emphasis on:
- Termination agreements, exoneration of responsibility, penalties etc.;
- The analysis of cancellation or deferral of contracts due to the impossibility of developing the business;
- Prevention and strategies against claims due to the delay in the delivery of orders, exhaustion of stock, orders cancellation etc.;
- Review of guarantees, collateral, recourse to title in the distribution chain etc.;
- Renegotiation of master or general terms and conditions, including regulation of standard liability agreements for future business;
- Review of the leasehold agreements of your business premises, offices and warehouses in the event of concurrence of extraordinary and unforeseeable alteration of circumstances and possibilities of rent reduction etc.;
Refinancing
The main objective of refinancing is to replace present debt, whether it be existing loans or any other financial products in order to achieve a return over the financial resources of your company. The objective is to obtain more favourable conditions for the client such as lower interest rates, additional funding, debt relief, extension of the payment terms or modification of the type of financial products in order to adapt the financing to the present situation.
It is important therefore to be in a position to provide the banks or financial institutions with all relevant information, they will then have a true and accurate picture of the company, and therefore be able to assess the debtor capabilities to fulfil their financial obligations.
Refinancing directly brings, if new money is not required, lower interest rates and repayments. Should the refinancing requires the injection of new money to the company, in that case, probably, the repayment amounts will not be reduced, however, the increased liquidity would cover the cash assets requirements of the company.
Prior to refinancing negotiations we help and advice our clients with:
- Viability analysis of the different structures to approach the shortage of cash assets;
- Analysis of the repayments terms;
- Assessment of the business plan and the actual short and medium term needs;
- Identifying unencumbered assets subject to be offered as collateral.
- Our advice during the refinancing process is, among others, provided by lawyers and economists and includes:
- Standstill clauses regulating duration, conditions of duration and extraordinary circumstances allowing creditors involved to claim payment of their debt subject to the standstill;
- To do and not to do covenants, primarily financials, and their corresponding temporary enforcement if in breach of one or several specific covenants;
- Strong or weak comfort letters, taking into account jurisprudence criteria (clear commitments, capacity to commit, accurate wording to finalise the operation, applicable to holding companies as well as subsidiaries);
- Syndicated loans where the relation between lenders and representatives is regulated.
Restructuring
In most cases the restructuring runs simultaneously with crisis situations for a variety of reasons, could be circumstantial, structural, derived from a significant change in the business, increase or decrease in volume. The aim of the restructuring is to provide the business with a structure more in accordance with the actual situation in order to avoid the company’s insolvency and be better prepared to face future challenges.
In a crisis situation it is very important that the company starts negotiations with its principal creditors or the more relevant ones, as soon as possible, in order to agree good terms mutually beneficial for all parties.
Our competence and expertise place us in a prime position to offer our clients a highly and tailor made professional service in the following areas:
- New business plan including the design of integrated corporate plans;
- Viability analysis due to the shortage of cash assets;
- Repayment schedule proposal to preserve the company’s continuity;
- Establishment of restructuring concepts as well as its control and implementation;
- Due Diligence advice and assistance in mergers and acquisitions of companies in difficulties.
Bankruptcy
Once the financial situation of the company has been assessed and it is clear that it must be resolved by way of bankruptcy proceedings, Grupo Gispert, one of the leading firms in bankruptcy proceedings, provides a highly expertise and quality service in the difficult task of business management in times of crisis:
- Pre-bankruptcy balance sheet audit and viability plans
- Advice and creditors representation in bankruptcy proceedings before the official receiver
- Prepare and institute voluntary and involuntary bankruptcy proceedings
- Negotiate with creditors to reach settlement
- Acquisitions or transfer of profitable units
- Legal representation and defence of management in bankruptcy proceedings
- Intervention and representation of creditors in bankruptcy proceedings
Grupo Gispert is here to help to assess your company’s needs during this new reality and offer our services tailored to your needs.
Este artículo está disponible en: Castellano Deutsch Català
