Carrying too much debt? You may need a capital and debt restructure

The impact of the coronavirus pandemic meant that many businesses took all possible steps to survive, including taking on more debt. As businesses have opened up some are realising that they are not as profitable as before. And repaying the pre-coronavirus and post coronavirus-debt may not be possible.

What can you do if your business is in this situation? 

Be reassured that taking on more debt and surviving lockdown was the right thing to do when the pandemic hit. The circumstances under which that debt was incurred and built up were truly unprecedented and you should take comfort in that you were not alone in dealing with some very difficult decisions.

You should also take comfort because there are solutions available to you. These solutions will allow you to remain in control and to drive your business forward in the ‘new normal’. 

A capital and debt restructuring is a consensual process that changes the capital and debt structures currently in place to make sure they are more aligned to your current and revised forecast performance. The purpose is to make sure that this structure incentivises, supports and is appropriate for your current circumstances.

In separate articles in this series, we will set out the following steps:

  1. Preparation  – what you need and how to prepare it.
  2. Intermediate steps  – some of the things you might need to try.
  3. Aligning interests  – if the intermediate steps are not sufficient, then you need to fully understand and align your stakeholders interests before moving into a wider consensual process.
  4. Consensual process  – the informal route to a restructure, keeping everyone on board.
  5. More formal solutions  –  should they be required, such as a CVA or the infamous pre-pack administration and other insolvency led solutions.

Our Restructuring Advisory team can help with all of the above. Contact Gareth or Damian today to discuss your current circumstances.