Managing Uncertainty Through Financial Crisis Requires Proactive Guidance
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While we don’t know how the COVID-19 virus will finally be contained or when the multitude of closures and stop-work and stay-home orders will be lifted, based upon our years of experience in advising clients in crisis situations, we can reasonably anticipate the following in the interim:
- Issues will affect all sides--borrowers, lenders, trade creditors, landlords, employees, equity holders, etc.—as revenues are impacted, defaults increase, and credit tightens.For companies that were already distressed, the current crisis may be the straw that breaks the camel’s back.
- Businesses tend to move slowly, or even freeze up when faced with uncertainty, but a wait and see approach is not likely to be a long term solution in the current environment. A better solution is likely to be a pro-active one.
- Cash is and will be king for the foreseeable future. It will be necessary for almost everyone to take measures to preserve cash. Preparing and updating cash flow projections and determining the business’ “burn rate” will be critical.
- Now is the time to actively review loan agreements, to analyze credit availability, and to consider issues that may arise with loan covenants.It will likely be necessary to negotiate with lenders regarding amendments, waivers and forbearances to address business disruption.
- Consider the review and revisions that will be necessary to your business plan and explore the ins and outs of developing an overall restructuring plan. It may be necessary to consider bankruptcy or other turnaround solutions that can be implemented to achieve new goals.
- Realize that adversity can also present opportunity.Consider seeking advice on how to evaluate possible transactions that may present themselves, and how to put buyers and sellers together.Insolvency situations present unique opportunities to complete deals.
Dickinson Wright has taken its own proactive measures and formed a SOLVENCY TASK FORCE to assist clients with their questions as we all address this period of financial uncertainty. There are often times a number of different options available to a client that is struggling, all of which might not be readily apparent. Our focus is helping clients sort out what to do with limited resources, connect them with other needed financial advisors, advise on transactions that may arise in this context, and if the need is there, help them seek relief from the courts. Sometimes the answers are not going to be pretty, or easy. But there are usually answers. Below are people to reach out to listed by our offices—but we are not location specific, and you can contact any of us as you may find most useful for your situation—we’ll make sure you get lined up with the right personnel.
DICKINSON WRIGHT SOLVENCY TASK FORCE
Arizona
- Carolyn Johnsen | T:602-285-5040 | E:cjjohnsen@dickinsonwright.com
- William Novotny | T:602-285-5006 | E:wnovotny@dickinsonwright.com
- Alan Perlman | T:954-991-5427 | E:aperlman@dickinson-wright.com
Kentucky
- Brian Johnson | T:859-899-8704 | E:bjohnson@dickinsonwright.com
Michigan
- Daniel Gosch, Chair | T:616-336-1015 | E:dgosch@dickinsonwright.com
- Steven Howell | T:313-223-3033 | E:showell@dickinsonwright.com
- James Plemmons | T:313-223-3106 | E:jplemmons@dickinsonwright.com
- Doron Yitzchaki | T:734-623-1947 | E:dyitzchaki@dickinsonwright.com
- Theodore Sylwestrzak | T:313-223-3036 | E:tsylwestrzak@dickinsonwright.com
- Rachel Wolock | T:313-223-3009 | E:rwolock@dickinsonwright.com
Nevada
- Carolyn Johnsen | T:602-285-5040 | E:cjjohnsen@dickinsonwright.com
- Brian Irvine | T:775-343-7507 | E:birvine@dickinson-wright.com
- William Novotny | T:602-285-5006 | E:wnovotny@dickinsonwright.com
Tennessee
- Kimberly Stagg | T:615-620-1732 | E:kstagg@dickinsonwright.com
Texas
- Carolyn Johnsen | T:602-285-5040 | E:cjjohnsen@dickinsonwright.com
Toronto
- John Leslie | T:416-646-3801 | E:jleslie@dickinsonwright.com
- David Preger | T:416-646-4606 | E:dpreger@dickinsonwright.com
- Lisa Corne | T:416-646-4608 | E:lcorne@dickinsonwright.com
Reach out to us at any time; we’re here to help.
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