Financial Restructuring

Stony Hill Advisors specializes in guiding financially distressed companies through strategic restructuring, offering tailored solutions like debt-to-equity conversion and long-term trust indentures. They provide crucial guidance on crisis cash management, customer and vendor relationships, and recognize Chapter 11 as a key restructuring process, aiding clients in achieving a successful outcome within the legal framework. Through their comprehensive solutions, Stony Hill Advisors safeguards valuable assets and positions companies for lasting success by addressing challenges in the restructuring process.

Turnaround Support

Stony Hill Advisors specializes in assisting companies grappling with financial distress by providing tailored solutions designed to meet each client's unique needs and objectives. Their suite of solutions includes personalized strategies such as debt-to-equity conversion, long-term trust indentures, and other customized debt resolution methods. By tailoring their approaches, they aim to optimize outcomes for their clients.

In addition to tailored solutions, Stony Hill Advisors extends their expertise in crisis cash management and offers guidance on managing customer and vendor relationships. They provide strategic insights and survival strategies crucial for maintaining operations during challenging financial periods. Moreover, they navigate the legal complexities of Chapter 11, a widely recognized restructuring process, guiding clients through the legal framework to achieve successful outcomes.

Stony Hill Advisors excels in identifying cash opportunities within a company's assets and overhead. They guide clients in preparing for financial battles, improving capital structure, and developing redirection and growth plans. Recognizing financial distress early on and diagnosing it comprehensively are pivotal steps they emphasize. Timely recognition can be instrumental in preventing bankruptcy and positioning the company for a successful turnaround. Through their comprehensive solutions, Stony Hill Advisors effectively address the challenges inherent in the restructuring process, helping preserve valuable assets and paving the way for the company's long-term success.

Recapitalization

Recapitalization and bankruptcy are distinct strategies employed by companies facing financial distress. Recapitalization centers on modifying a company's debt and equity composition to achieve a more stable capital structure. This may involve replacing preferred shares with bonds or adjusting the debt-to-equity ratio, ultimately aiming to enhance financial stability and structure. However, recapitalization is often intricate and challenging for distressed companies due to limited interest in the capital markets.

On the other hand, bankruptcy represents a legal recourse permitting a company to either reorganize or liquidate assets to settle its debts with creditors. Although it offers a way to restructure a business—whether a corporation, sole proprietorship, or partnership—it is a costly and time-consuming process. Furthermore, bankruptcy can lead to the relinquishment of managerial control and have enduring, adverse effects on trade relationships, customer associations, and personal credit.

In summary, recapitalization involves adjusting a company's financing mix to bolster its capital structure, while bankruptcy is a legal mechanism for asset reorganization or liquidation to meet creditor obligations. Each strategy bears its unique advantages and complexities, necessitating a careful evaluation of the company's circumstances to determine the most suitable approach for addressing financial distress.

Chapter 11 Bankruptcy

To avoid costly mistakes in the complex process of bankruptcy it is important to access all options before making a final decision on your strategy.

Chapter 11 bankruptcy is a legal process that allows businesses and individuals to reorganize their debts and assets under the bankruptcy laws of the United States. It is often referred to as a "reorganization" bankruptcy and is available to every business, whether organized as a corporation, partnership, or sole proprietorship, and to individuals. Chapter 11 bankruptcy is typically used to reorganize a business, which usually involves proposing a plan of reorganization to keep the business alive and pay creditors over time.

However, it can also be used as a mechanism for liquidation. When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11. In Chapter 11, the debtor remains in possession and has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money.

Chapter 11 usually results in reorganization of the debtor's business or personal assets and debts but can also be used as a mechanism for liquidation.

Chapter 11 bankruptcy is a useful but expensive tool, and it may make sense for small businesses that want to keep their business running and get debt relief. However, it can be extraordinarily complicated, and it is wise to consult with a qualified bankruptcy advisor and attorney.

Statutory Restructuring

A statutory debt restructuring procedure offers a range of advantages contingent on the specific context. Firstly, it effectively mitigates the "holdout" risk, creating hurdles for a minority of creditors seeking to obstruct a restructuring deal. This fortifies the restructuring process and ensures a more coherent and expedited resolution, whether through contracts or legal mandates. By doing so, it minimizes deadweight losses, ultimately favoring both borrowers and lenders involved in sovereign debt restructuring.

Secondly, the procedure aims to instill order, predictability, and speed in the restructuring process. This systematic approach facilitates the preservation of asset values and the protection of creditors' rights, ensuring a fair and structured mechanism. Notably, debt restructuring can lead to reduced interest rates, subsequently freeing up cash and fostering financial savings. This financial relief can greatly aid borrowers and lenders alike, enhancing their financial flexibility and organizational capacity.

Furthermore, the procedure enhances overall financial organization and flexibility, offering a structured and foreseeable framework for debt restructuring. Ultimately, it stands to benefit both borrowers and lenders by minimizing risks, optimizing efficiency, potentially lowering interest rates, and fostering improved financial organization. The advantages of a statutory debt restructuring procedure thus underscore the positive impact it can have on all stakeholders involved.

Chief Restructuring Officer

A Chief Restructuring Officer (CRO) is a senior officer of a company given broad powers to renegotiate all aspects of a company's finances to deal with an impending bankruptcy or to restructure a company following a bankruptcy filing. The CRO acts solely in the interest of the company and its stakeholders, serving as an honest broker to quickly instill trust and confidence.

The use of CROs has been increasing in popularity since the 1990s, and they are sometimes seen as an alternative to using a trustee in bankruptcy in a reorganization bankruptcy. CROs are sometimes compared to "turnaround" consultants, although the CRO differs from a turnaround consultant in that the CRO is an official of the company and has executive power.

The role of a CRO is approximately four decades old, and they are now ubiquitous in the restructuring community. A CRO is a member of the senior management team and typically reports to the CEO or directly to the Board of Directors.

The CRO's role is interim, and if they can implement the restructuring programs quickly, their life span in any one job could be as short as a year or up to three years at the outside if it also encompasses an operational transformation. The company may bring in a CRO when it has insufficient management bandwidth, and restructuring situations are complex, time-consuming, and high pressure.

A professional restructuring approach requires strong, dedicated leadership – experienced executives familiar with restructuring processes and routines and ultimately aiming to bring about successful processes and results. A CRO's roles and responsibilities are case-specific, and they can be broad or narrow and include powers that are extensive or limited.

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