Bankruptcy and Restructuring – Partnering with the Right Consulting Firm during this Crisis

Every business leader’s worst nightmare is being forced into bankruptcy. The legal requirements are arduous and the stress is overwhelming. This legal process provides major limitations on what can and cannot be done once this process is started. However, the operational and financial partners you choose to help you through the process are critical because we have seen many businesses succeed or fail depending on the professional advice they acted on as they restructured their business. In a recent incident, I watched as multiple financial advisors, from a reputable major consulting firm, worked primarily on their legally-required duties to pay off creditors and did not help the business owner to make the tough decisions that could keep the business afloat after the creditors were paid. The exorbitant cost of these consultants only accelerated the bleeding in the business until it was bled dry, leaving the owner of this former $200M business with only the shirt on his back. Had a turnaround resource such as ours been engaged earlier, I am confident that this business would be on a path to recovery and sustainability.

From my comments, one can see I have little confidence in major consulting firms and I will provide some background on my views. On a routine basis, we come in behind the work of these firms and find major issues with their audits and verification of financial reporting accuracy and inventory valuation. As for their capabilities in bankruptcy restructuring, for the most part, they are specialists in a limited field of practice, and the more senior they are, the greater chance that they have been professional consultants for much of their career, having spent little time in actually running a business. Because of the lack of breadth in understanding businesses, they are often incapable of addressing or understanding issues outside of their limited field of experience. This inexperience limits their capability to help lead the organization through a business restructuring process. Another major concern to a business owner should also be the high cost of these consultants during a time when cash is so scarce. These high fees pay not only for the onsite consultant but a staff of managers and other overhead back at their offices. Of course, I should not paint all of these consultants with such a broad brush but my experience is shared by many others in business.

Enough of my rant and now to my point. Long before a business finds itself in a situation where bankruptcy is being discussed, they should be making contact with experts such as us to see how to deal with this issue before a bankruptcy action is an inevitability. Our objective is to help you save your business and we have years of experience in successfully leading businesses through restructuring. If a bankruptcy is inevitable, our capabilities can also lead the business through this process. However, if you partner with us, you will have the added benefit of knowing that we are also implementing a restructuring plan that will save all that you have worked for.

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