Restructuring Problem Credits

Course Objectives

The purpose of this workshop is to identify the key analytic, structuring and restructuring lessons to be learned from deteriorating / failed credits. This is a highly interactive workshop where case studies and exercises are used to reinforce key learning points of the workshop.

Specifically participants will be equipped to:

• Understand the role of covenants in credit management and crisis situations
• Understand the process for managing exposures to a company in distress
• Discuss the business and operational decisions required in order to place its business on a more solid foundation
• Assess the available options to lenders / investors, compare likely recovery against other alternatives and the current market price of the company's debt, where applicable
• Identify the restructuring alternatives, evaluate the possible choices and select the most appropriate restructuring solution, exit and/or workout options for companies in distressed situations.

Target Audience

Credit risk managers, bond and mezzanine and equity investors, lending bankers, and other finance professionals working in credit risk management and problem loan areas, including restructuring, work-outs and special care units.

Content

CRISIS MANAGEMENT

Managing exposures to a company in distress: the short term crisis management and the medium term business revisions required to manage the situation.

Triggers to distress

• Covenant breach
• Liquidity crunch / Refinancing difficulty
• Insolvent trading:
  • Defining insolvency
  • Jurisdictional considerations
• Exercise: Covenant breach and actions taken

Managing crisis

• Management response to covenant breaches
• Exercise: Exchange offers
• Options for lenders
• Potential parties to a restructuring
• Appointment of external advisors
• Cash management
• Majority decision issues
• Establish and certify the company's going concern status

Legal framework

• Insolvency regimes
  • Responsibility of directors
  • Recovery rates
• US models: Chapter 11 (reorganisation) and Chapter 7 (liquidation)
• Exercise: Impact of Chapter 11 on Global companies
• Overview of EU Insolvency Regulation
  • Establishing centre of main interest (COMI) and secondary proceedings
  • Summary of insolvency procedures in UK, Germany, France, Spain
• Exercise: Jurisdiction selection for insolvency proceedings.

DEBT RESTRUCTURING ALTERNATIVES

• Examine the available options, compare likely recovery against other alternatives and the current market price of the company's debt, where applicable

Exit Options for the Lender

• Sale of exposure, hedge (CDS, credit insurance)
• Negotiate: waive covenants, debt / equity swap, debt / debt swap, amend and extend
• Accelerate: enforce, bankruptcy filing

Quantify potential recovery for creditors

• Relative claims and negotiating positions creditors
• Stakeholders with special negotiating positions
• Claims are not pro-rata
• Intercreditor agreements and terms
• Impact / influence of distressed / vulture funds on restructuring alternatives
• Cram down rights: forcing confirmation of a plan over the objections of dissenting classes e.g. shareholders with voting rights.

FINAL CASE STUDY:

Participants will work in groups to apply the key concepts learned during the two-day workshop and apply these to a real restructuring situation.

Workshop Times

Below are typical timings for our courses; upon registration we shall advise you if these have changed.
Breakfast: 8.30am
Course Start: 9.00am
Course End: Between 5.00pm and 5.30pm
Lunch: starts between 12.30pm and 1.00pm, and lasts no longer than 1 hour.
Short breaks: 10-15 minutes are taken mid morning and mid afternoon.