Recipe for Resilience During Restructuring

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The ultimate objective of the Chief Restructuring Officer (CRO) is widely published: to use their industry-specific expertise to fine-tune a business’s finances and/or operations pre, throughout, and post-bankruptcy. Yet, there are comparatively few resources that discuss the keystone principles to ensuring a healthy emergence from the conditions that necessitated a CRO’s involvement in the first place. While there will inevitably be differences of opinion among board members, the C-suite, employees, and stakeholders whose investment of resources the CRO has been entrusted to preserve and improve upon, all share the same categorical imperative to make logical moves toward the longevity of the business. The following articulates actionable concepts that all decision-influencing or decision-making parties must consider when discussing the appointment of CRO, and what to expect in the first days of assignment.

In a Pickle

Most businesses are launched and sustained by a unique mixture of a few primary motives: to serve a market need or close a product/service gap and make a profit in the process. In pursuit of success, original motives can get lost in the chaos of managing talent, overseeing operations, balancing the budget, performing on shareholders’ expectations, and the like. Even where there are clearly defined divisions of responsibility via the C-suite to focus efforts, executives can lose perspective of long-term objectives while immersed in their day-to-day tasks. As consequences are realized down the line, decision-making may fall victim to “quick fixes” that perpetuate the problem, rather than adhering to procedures that formulaically measure productivity and reasonably project profitability. The cumulative result of these mistakes often includes consideration for filing bankruptcy.

The Secret Sauce

Fortunately, we live in a time and place where there are many financial revival solutions for businesses who find themselves bordering on or already in Chapter 11 bankruptcy. One of, if not the most economically efficient option is securing a Chief Restructuring Officer. CROs’ notion of fiduciary responsibility requires that they assess the financial condition of businesses objectively and tactfully curate sustainable solutions, preventing the need to file at all or return the business to a position where operations can continue albeit Chapter 11 status. Certainly, wise selection of a CRO will keep the prospect of a Chapter 7 scenario at bay for the foreseeable future and restore stakeholder confidence.

Not Here to Cook Your Goose

CROs want to get businesses out of hot water as soon as possible. The board, management, and stockholders’ acceptance of the state of affairs and that outside expertise is needed—demonstrated by subsequent appointment of a CRO—is the first step in preventing future liquidation. Furthermore, earnest support and empowerment of the CRO via the board and other key members of management is vital to launching a promising turnaround process. Lack of cooperation can hinder and potentially doom the efforts of the CRO.

Essential Ingredients

Seasoned CROs are equipped with a tried and true toolkit of solutions that can be applied to a variety of industries, specialized verticals, and unique circumstances. Long-established knowledge, know-how and networks collectively provide a sufficient “runway” in time and access to capital/cash to pave the turnaround process. Throw debt restructuring, financial contract renegotiation and related maneuvers into the mix, and businesses are well on their way to recovery.

Low-Hanging Fruit

CROs do not waste any time identifying additional ways to immediately accelerate the financial condition toward the green zone. A few “gimmes from the get-go” include:

  • Analyzing the deposit banking relationship, especially operating account fees and the aggregate earnings credit rate. Pending the size of deposits and the scope of monthly transactions, savings can make a significant difference in the net liquid value of the estate. Note that if a business is in or nearing Chapter 11 status, the CRO is required to move accounts to an institution that is an approved Debtor-In-Possession depository.
  • Confirming receipt of any municipal, state, and federal tax incentives, waivers, or grants the business is eligible for.
  • Negotiating costs of materials and/or talent needed to produce the product or service. For certain industries, this may include joining a Group Purchasing Organization, switching B2B vendors entirely, or utilizing independent contractors for circumstantial, one-time projects.
  • Revisiting product/service pricing model and market positioning to maximize profitability. This ensures that products, services, and price points are attractive to the areas where they are offered and explores new niches yet to be penetrated.  

In a Nutshell

There is no uniform solution to the complex challenges that contribute to a business’s need for turnaround expertise, and there is no shortage of opinions on how to return to favor in the eyes of those who have serious skin in the game. A Chief Restructuring Officer worthy of consideration would not ever venture to claim they have all the answers on day one, but must unapologetically ask the tough questions that will get the business back to a condition where it can confidently continue without the CRO’s help down the road.

Interested in learning more about my perspective on strategies for effectively turning around a business with a CRO, without leaving a bitter taste in everyone’s mouth? Contact the Global Fiduciary Banking Team at [email protected] or visit

Mary Ann McIntyre

MaryAnn McIntyre
Strategic Fiduciary Banking Partner, Axos Global Fiduciary Banking

From the onset of MaryAnn McIntyre’s banking career, she has focused on partnering with professional fiduciaries toward adhering to their ultimate, mutual objective: honoring fiduciary responsibility. She champions the Axos Global Fiduciary Banking commitment to proactively provide a superior Receivership banking experience by facilitating the mobilization of industry expertise and tech-forward resources that maximize estate values for the fiduciary clients she serves. MaryAnn demonstrates dedication to her clients’ success by maintaining an active role throughout the lifecycle of each banking relationship.

MaryAnn has served on several planning committees responsible for educating fiduciaries in highly regulated industries. Additionally, she puts her degrees in Communication and Political Science from University of California, San Diego to good use in her advocacy for initiatives at the municipal and state levels that directly benefit her clients and community.


Recipe for Resilience During Restructuring

This blog post was published by Axos Editorial Team on February 18, 2021 and last updated on February 18, 2021.

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