Company restructuring, liquidation and bankruptcy

Every company sooner or later faces situations where only appropriate, often radical decisions may save it from bankruptcy or state of repeated short-term loss of liquidity.

Only a responsible manager is able to detect the symptoms of a forthcoming financial crisis.

The symptoms are usually as follows:

• arrears in social insurance payments;
• tax arrears;
• search for questionable tax savings;
• signing non-profitable commercial agreements in order to ensure cash flow;
• avoiding solving current company problems by planning new projects;
• more and more frequent demands for payment from contractors;
• key suppliers reducing the limit on the company’s open account.

Even when managers look for such symptoms in their company it is often very difficult to identify them, because the managers are accustomed to systematic achievements of their intended and usually ambitious goals.

The so-called single-purpose ventures are a common economic tool. They are established only for the period of time needed to implement a given project or investment. Sometimes their owners decide to withdraw from the enterprise – in such cases one of the options is to liquidate the company.

The decision about restructuring, liquidation or declaration of bankruptcy is by no means an easy one. It usually takes a long time to make such decisions, since they require a thorough analysis of the company.

Therefore, in order to ensure success of the whole operation, it is crucial to select a suitable partner – an experienced adviser. His knowledge and experience in conducting processes of restructuring, liquidation, dealing with previous debtors and bankruptcy, will help owners and management of a company to successfully complete the process and minimise the associated risks.