TURNAROUND & RECOVERY
Our turnaround and recovery team is led by Nirmal Heeralall, Managing Partner, who is a Registered Insolvency Practitioner under the Mauritius Insolvency Act 2009.
Our specialist skills include:
- Advice to businesses on setting up procedures to prevent financial crisis
- Advice to businesses on identification of early warning signs of financial difficulty
- Advice to businesses on turnaround solutions
- Carrying out Independent Business Reviews
- Acting as liquidator in a shareholder’s voluntary winding up
- Acting as liquidator in a creditor’s voluntary winding up
- Acting as Receiver & Manager
- Acting as Administrator
Avoiding business failure
You should ensure that you have the right management procedures in place to keep a strong grip on your finances.
The following checklist is designed to help you spot any weaknesses in your management procedures and to take corrective action to prevent a financial crisis.
- Do you have a current written business plan?
- Do you review sales, cost and overhead levels?
- Do you prepare regular management accounts?
- Do you prepare monthly cashflow forecasts and annual projections?
- Do you review actual performance regularly against the projections?
- Do you prepare aged-analyses of debtors and creditors?
- Do your directors meet regularly to formally review progress?
- Do you know how much you owe and how much you are owed?
If you do not have the above procedures in place, you may be exposing your business to financial risks and should seriously consider seeking professional advice from our specialist insolvency services team now.
Early warning signs of financial difficulty
Things do not always go according to plan and you may be worried that your business is facing a potential financial crisis. You should be alert to the early-warning signs of financial difficulty which, typically, revolve around the following:
- Deteriorating debtor collections
- Increase in stock levels / work in progress and static/ deteriorating revenues
- Steadily increasing overdraft
- Overdue suppliers’ invoices
- PAYE, NPF & VAT arrears
- Turning to new suppliers to obtain more credit facilities
- Using disputes to delay payment to suppliers
- High employee turnover
- Decreasing margins
If any of the above applies to your business, you should seek urgent professional advice from us and we may be able to provide you with suitable business turnaround solutions. It may still be possible to save your business, if advice is taken early enough.
Independent business reviews
Independent Business Reviews are often demanded by lenders, investors and venture capitalists before finalising a lending or investment decision.
Whether management is seeking additional funding, or lenders or investors require reassurance as to the viability of the business, an Independent Business Review will provide a sound base from which management, lenders and investors can move forward.
Directors do not normally have much say in the choice of the reviewing accountant – the bank or investor will usually choose him from a panel of accountants selected by the particular bank or investor. The reviewing accountants’ principal client relationship will be with the bank or investor and not the company – although the company is always responsible for the costs of the Independent Business Review. Normally, the bank or investor will introduce the prospective reviewing accountant to the directors before the instruction is finalised. This gives directors the opportunity to discuss and agree the costs and timing of the Independent Business Review.
Generally, the reviewing accountant will seek to agree his fee on a time cost basis, and he will prepare an estimate of the expected fee based on the directors’ representations regarding the quality of information that they will provide to the reviewing accountant. It is important that directors are honest in the representations that they make to the reviewing accountant – misleading information is likely to lead to additional costs that the company will be expected to pay and may create an atmosphere of mistrust.
Directors should expect an Independent Business Review to add some value to their business – it is therefore important for directors to consider carefully the reviewing accountants’ terms of reference.
Typically, an Independent Business Review would include an assessment of:
- current trading and financial position;
- profit and cashflow projections;
- business and financial strategies;
- sensitivity analysis;
- management and systems;
- bank security cover; and
- the way forward for the business.
The reviewing accountant relies upon the co-operation of the management when preparing his report and one of the first things he will notice is whether the directors are genuinely on top of the financial situation or not, and whether they have a clear view of the future.
If you would like to discuss an independent business review in more detail, please contact us.
Recovery and insolvency solutions
Our main objective when working with an ailing business is to recommend ways of rescuing or restructuring the business to help it to return to a profitable state. This requires sound commercial judgment, pragmatism and integrity and we believe we have these skills.
First, we assess the business in difficulty by undertaking an independent business review and providing a report that combines technical detail with clear recommendations on financing options. We make these recommendations on behalf of the business’s bank or other lenders, for the company’s accountants, or for the management of the company itself.
Sometimes our business turnaround and recovery specialists’ assessments may show that although trading activity is viable, because of its weak financial position and additional funding needs, the company is unable to continue. In these circumstances our business turnaround and recovery specialists may act as receivers or administrators, often enabling the business to continue trading whilst new owners are found.
Alternatively, our partners act as liquidators, selling the company’s assets to meet creditors’ claims. But winding up a business is always the last resort. Wherever possible, we recommend ways of rescuing or restructuring the business, often helping it return to a profitable state.
Our turnaround and recovery team has long standing experience of dealing with all forms of insolvency appointments.