Counsel at “Spenser & Kauffmann” Attorneys at Law told about practical aspects of external borrowings restructuring
It is becoming more difficult to refinance during the crisis when banks have not enough liquidity. As a result, the list of requirements to the borrower is growing and willingness to meet the latter halfway comes to naught.
What to do when everything goes not according to the plan, – explained the Counsel, Head of Banking and Finance Law Practice at “Spenser & Kauffmann” Nickolas Likhachov during his speech at the I Financial Forum of the Bar Association.
He stressed that the reasons of insolvency can be various – from unfortunate current economic circumstances to incorrectly chosen strategy, resulted in excessive accumulation of the company’s debts.
In such cases it is extremely important to the borrower to start an anti-crisis measures program in the company, to develop a financial model for restructuring, to elaborate an individual action plan for each situation as well as to systematize a proposal for restructuring with due consideration of not only his interests but also the interests of the creditor, – says Mr. Likhachov
On the other hand, it is important to the creditor to know that business should be evaluated using Capital Assets Pricing Method instead of liquidation method, as well as to consider a possibility of delay in investment projects where the essential for debt repayment is a flow, generated by investments.
In general, according to the Counsel at “Spenser & Kauffmann”, there is no single rule or plan of restructuring. It depends on the asset structure of the borrower and on the number of creditors. “We must always remember that any financial instrument at one point can serve as restructuring instrument”, – says Mr. Likhachov.