If a company wants to continue to be successful in the future, some things have to fit together: strategy and business model, front-end and back-end, value creation and customer requirements, data and processes and, last but not least, financing and balance sheet. If this is not the case, costs get out of hand, efficiency is too low, and inventories are too high. The losses are financed with loans. But even after a successful economic restructuring, a “rucksack” often remains on the balance sheet. The loans, with which the losses but also the restructuring measures were financed, are to be serviced. The result: a “zombie” company that has been restructured in terms of performance, but has a weak balance sheet. It carries too much legacy with it, but is not (yet) ready for bankruptcy. With the preventive restructuring framework in the StaRUG, the legislature created instruments on January 1, 2021 to deal with them early, with foresight and better.
No restructuring plan without comparative calculations
The way to the goal so far: A plan in which the financial requirements were derived, calculated and measures were defined until the key figures were correct in the end. In this way, the refinancing ability was guaranteed at least on paper.
Interventions in the contractual relationships were previously taboo, or rather, reserved for the various insolvency proceedings. The restructuring process in accordance with StaRUG allows the balance sheet to be restructured without bankruptcy and even in the event of a new and very broad “impending insolvency”. Correspondingly, legacy issues on the liabilities side can be handled intelligently and in a future-oriented manner without publicly effective insolvency proceedings.
Prerequisite and decisive success factor: Comparative calculations that show that no alternative is more economically sensible, ie even in the case of a positive insolvency procedure, that is to say with going concern values, no creditor is better off. It should also be taken into account that the procedure must be financed. .
Significantly higher risks for the CFO
The StaRUG brings additional obligations for the CFO – with considerable effects on his liability risks. The reason for this is the newly limited and newly formulated impending insolvency.
This occurs if the company is not financed for at least 24 months with a predominant probability.
If the documentation is missing or inadequate, the CFO in particular runs the risk of being held responsible for damage to the company and the creditors – of course, viewed ex post, as is usual in the case of appeals. In addition, the CFO is obliged to implement a crisis early warning system including evidence of how reactions are derived and implemented. Corporate bodies, but also shareholders, would do well to internalize the fact that through-financing is to be ensured now for at least 2021 and 2022.
Action requirements for every CFO
Successful companies have to internalize: The change in the legal framework as a result of the StaRUG does not only affect “crisis cases” and restructuring candidates. They also have to prove or document the through-financing. The main tasks and day-to-day work of CFOs will therefore change significantly everywhere: Scenarios must be set up that make it clear which EBITDA risks exist or can occur over a period of 24 months and where there are dangers for an increase in debt.
• Integrated planning for 24 months must be drawn up – the cash flow must be clearly derived from the income statement and balance sheet. This is done on a revolving basis with every forecast – for 24 months
• The effects of growth and CAPEX strategies on through-financing must be critically examined and effective “reserve” measures must be derived prophylactically for possible EBITDA declines. In the case of ambitious plans, which are, for example, the basis of LBO financing, scenario considerations make sense, which show which effects occur if the market goes worse than expected. Alternative constellations of the planning premises make significantly more sense than “blunt” discounts.
These steps are to be discussed periodically in the supervisory bodies, agreed with the shareholders or their representatives and documented accordingly.
Concrete steps: looking ahead
A forward-looking approach is to be followed, in which the following key questions are answered:
• What can the factory do (technology, batch sizes, processes)? What do the market and customers want (in the future)? What do data structures and processes look like (end-to-end, unique)? What is actually used to make money? What is eating too many resources?
Scenarios and options must be developed at an early stage, liability risks, but also options for action and perspectives must be assessed. The know-how and experience mix of the external consultant is decisive for the success of the company. He must have extensive restructuring experience and, above all, match professional handling of the financials for the scenario analysis with real insolvency experience. Otherwise, one thinks too quickly in dismantling scenarios, which in no way does justice to practice.
It is crucial to develop and evaluate necessary and sensible options, to carry out convincing and meaningful comparative calculations, to pick up all stakeholders correctly at the right time and to accompany companies on the restructuring path in an expert and competent manner. It does not matter whether a free restructuring, a formal restructuring concept (BGH, S6), a restructuring plan (StaRUG) or one of the insolvency proceedings is the right tool for solving problems. The planning and financials must encompass all approaches and be transferable.
If all the results are ultimately superimposed, it becomes immediately clear where there is a fit, what makes economic sense and what a viable picture of the future can be built from – but also what will no longer work in the future. It is always about facts, about clear and quick decisions, not about opinions.
– .
