A practical guide to

developing and executing

your restructuring plan

Corporate
restructuring
& turnarounds
Hope is not
a strategy
“In these strange and uncertain
economic times, having knowledge
2020 has been a year of uncertainty.
of the options and strategies
presented by Chapter 11
reorganization bankruptcy is Extreme climate events, political instability and
important...We are already seeing
an uptick of Chapter 11 filings
a global pandemic have taken a significant toll
in parts of the country.” on the markets. Businesses in every industry
Dickinson Law are now facing the possibility they won’t be able
to fulfil contracts and considering entering into
insolvency.
Restructuring is a critical strategy for those who
need to fundamentally change and improve their
company’s financial or operational structure to
survive an economic downturn.
To weather the storm, and avoid more extreme
measures, such as liquidation, critical steps must
be taken quickly to assess the health of your
business and implement an action plan.
Our mission is to help protect you and your
company’s potential. If you think your business
is in danger of becoming insolvent, use this
guide to understand the best way to move
forward and turn things around.

The following content should be used as a guide only and does not constitute financial advice.
Please seek the help of a professional when developing your restructuring plan.
3
In this
guide
Part 01
A closer look at
the current climate

Part 02 Part 03
Why file for Four critical
Chapter 11? steps to take

Part 04
How to get
started today

4
Part 01

2020 sees
highest
number of US
bankruptcies
in a decade
According to a report from S&P Of the companies that have filed for
Global, US bankruptcies are on Chapter 11 protection, 35 reported
track to hit their worst levels since more than $1 billion in liabilities. It’s
2010, with 424 companies declaring anticipated that these numbers will
bankruptcy this financial year (up to continue to grow (S&P Global).
August 9th).
“As expected, we continue to see
Industries hit hardest by the significant year over year growth in
pandemic-induced recession include Chapter 11 commercial bankruptcy
consumer-focused, in particular filings,” said Deirdre O’Connor,
retail, with more than 100 retailers managing director of corporate
filing for bankruptcy this year. restructuring at Epiq.
The report also shows the impact “The COVID-19 pandemic is
on US industrial and energy reshaping consumer buying
sectors, accounting for nearly habits. Therefore, we will continue
100 bankruptcies between them. to see large retail, energy, and
transportation businesses taking
Bankruptcy data from legal
advantage of the tools provided by
services firm Epiq shows that
a formal bankruptcy to restructure
Chapter 11 filings are up 52% this
to be more profitable and
July, and up 30% over the same
competitive in the long-term.”
period last year.

5
Part 01

Subchapter 5 The new Subchapter 5 of the United States

streamlines process Bankruptcy Code came into effect in February
for small businesses of this year with the aim of ‘streamlining and
expediting the debt restructuring process
for small businesses’ who elect to file for
bankruptcy (JDSupra).
On March 27th, the new Coronavirus Aid,
Relief and Economic Security Act (CARES
Act) was signed, substantially increasing the
debt threshold for companies eligible to file
for Chapter 11, Subchapter 5 under the US
Bankruptcy Code – from debts no greater than
$2,725,625 all the way up to $7.5 million.
The CARES Act is only temporary. With the act
in effect for just one year, the flexibility it offers
Directors of small businesses to operate while
insolvent will ultimately have to result in a more
formal outcome.

6
Part 02

Chapter 11 is often referred to as the

‘reorganization bankruptcy’. If your core
business is viable but you’re experiencing
financial hardship, filing for Chapter 11
under the US Bankruptcy Code allows you
to maintain control over business operations
while a restructure can occur, with future
earnings allotted to pay off creditor debts.

Why file for

Chapter 11?
All debt collection, foreclosures Central to achieving Chapter 11
and repossessions of property are status is a plan of action, with
suspended under this status, which critical steps laid out that will reach
removes the burden of financial the best outcome for all. This will
stress and puts you in a better include a clear strategy for how you
position to focus on how you will propose to pay off creditors and get
move your company forward. the business back into its optimal
shape. This plan is essentially a
Bankruptcy under Chapter 11 is
contract between debtors and
an attractive option for Directors
creditors, with all terms negotiated
who need more time to reorganize
and agreed upon by both sides as
and rebuild without the strain on
well as the Bankruptcy Court.
finances. However, it is a lengthy,
complex and costly legal process The filing business has four months
that many fail to see through to develop this reorganization
to the end. While studies vary, plan, although it can often be
the success rate is estimated extended up to 18 months before
to be only 10-15%. the creditors can take matters
into their own hands and propose
a plan for the company.

7
Part 02

Turning hardship While the coronavirus has caused solvency

into opportunity issues for many companies, those who have
acted fast are already getting a chance at a
second life.
Chinos Holdings, parent company of J. Crew was
among the first of the major retail companies to
act, filing for bankruptcy protection in early May.
Anthony Lupo, partner at law firm Arent Fox, said
their decision to file quickly is worthy of praise.
“With COVID-19, there is a window of
opportunity right now. That window is closing
soon, so if you don’t restructure now when
people are more than willing to renegotiate,
you’re going to be forced to go to them later,”
said Anthony Lupo.
Under a debtor-in-possession agreement,
J. Crew will convert $1.65 million of debt into
equity and secure $400 million in financing
through its existing lenders.
J. Crew will also be able to save $130 million in
rent concessions over the next few years, and
has reopened 458 of their 500 stores since
lockdown. Bankruptcy has been a valuable tool
for them to restructure their over-leveraged
business and continue operating.

8
Part 02

Reorganization is a key While Chapter 11 is a proven turnaround route,

route to take for distressed a Section 363 Sale (under Section 363 of the US
companies to navigate Bankruptcy Code) may be an even faster path
uncertainty, but there are to a positive outcome. Under Section 363, an
always options. organization may be able to fulfill its obligations
to creditors by selling its assets and using those
funds to pay off their debts.
A Section 363 Sale may be completed in as little
as 2 or 3 months, while a Chapter 11 plan can
often take six months or more to see through to
completion. The process is less rigorous than
a Chapter 11 reorganization, with the company
able to approve the sale by their board, along
with approval from the US Bankruptcy Court.
Provided the proposed sale is reasonable and
it can be proven that creditors will receive more
than they would under a full liquidation (Chapter
7), the Section 363 can be executed swiftly and
without the need for creditor voting.
While no two restructures are alike, they all
require a high level of review and planning,
which is why all available options should be
carefully considered.

What’s my
best option?
9
Part 03

01 02
Get your house Seek expert help
in order You must demonstrate that
you’ve enlisted the help of
Filing for Chapter 11 will be
qualified advisors and lawyers.
irrelevant unless you have
While you might hesitate at the
all your documentation and
extra cost, getting the right
records in order. Without a clear
advice at this stage can save you
understanding of how your
significant cost in the long run –
business is being run and
and save your business.
where money is being spent,
you can’t possibly attempt to Highly-qualified restructuring
solve these problems. experts have extensive
experience in turning businesses
around. They can help you get
a clear picture of your financial
position and provide you with the
best options for moving forward
in line with legal requirements.

03

Four
File your petition
Once you have all your
documentation in order and

critical
procured advice from a qualified
advisor, file a petition for Chapter
11 with the Bankruptcy Court
where you have a residence.

04

steps
Prepare your
restructuring plan

to take
Central to filing for Chapter
11 status is a step-by-step
reorganization plan. Your
creditors and the court must
agree to the terms of this plan.

10
Part 04

As a company needing to restructure or formally

file for Chapter 11, you’re on your way to learning
some of the most valuable business lessons
you’ll ever learn. It is possible to come out the
other side a stronger company; you just need
to be prepared.

Ansarada offers restructuring Whether you are based in the US,

packages to help companies Europe, Asia, Australia or the UK,
quickly assess their current get all your documentation and
financial position and alleviate records in order in a Virtual
distress by preparing and Data Room and get visibility
implementing both capital over the changing risk impact
and cost measures. on your business.

Take action
while there’s
still time to
change the
outcome
11
Part 04

Execute your
restructuring
plan with
a Data Room
Ansarada Data Rooms can give you certainty,
using proven insights, advanced AI-powered
tools, integrated Q&A facility and collaborative
workflows. Understand how your business is
being run and where money is being spent,
based on real data. All activity in the Data Room
is carefully tracked and recorded for a full audit
trail. In the worst-case scenario, this will prove
that you took every possible action to get the
business back into shape.

For the earliest stages of planning,

Ansarada Pathways offer a clear
path forward. Pathways are
digitized checklists, based on best
practice from over 35,000 previous
transactions, that can step you
through your restructuring plan
and ensure visibility and
compliance at every stage.

12
Part 04

Data Room Restructuring Solution Cloud connections

Help your client get all their Drag and drop or sync with popular
restructuring documentation and records cloud tools like Box, Google Drive,
packages in order in a Virtual Data Room Dropbox and One Drive.
for all regions and visibility over the changing
risk impact on their business.
Unlimited data
Simple pricing. Data and guest
Get started on a 900 users are free and unlimited.
Restructuring Plan today
Confidence & control
Accelerate the restructuring process
Satisfy risk, compliance and
with the world’s most advanced
disclosure requirements with ease.
Virtual Data Room.
Simple design
Intuitive, fast, mobile friendly, and Restructuring
easy-to-use, even for first-timers.
pricing package
Ultimate security
ISO 27001 certified highest rating.
Confidence & control Talk to sales
Satisfy risk, compliance and
disclosure requirements with
ease. Assign team tasks, updates
and approvals.

Our 900 Restructuring Plan 900 plan

Free and unlimited data

Free and unlimited virtual data room guests (Guest Users

are persons or parties who are not Users, or affiliated with,
or representatives of Users).

Pathways pre-built for superior information governance can

be instantly deployed to any potential transaction.

Free advisor workflow, collaboration, reporting tools and templates

1 virtual data room

Google Drive, Dropbox, Box and OneDrive integration

Assign team tasks, collaborate, request updates and approvals

Live chat support and online knowledge base

13
Part 04

Your best
option
for moving
forward
All of our Data Rooms and Pathways have
been developed to help you support you with
visibility of information, clarity on requirements
and confidence on your roadmap. Start your
restructuring package on a free trial today.

We’re here to support you Get on the front foot and get
during financial and operational started today with a no obligation,
challenges. Now you can get the 14 day free trial. Let us help you
confidence you need to navigate protect and raise your potential.
the COVID-19 crisis and come out
the other side a stronger business.
Start your free trial

14
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