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Restructuring

Overview

Varnum helps companies with all stages of distress, from helping manage the legal aspects of operational changes designed to prevent future financial problems to guiding a company through a Chapter 11 or other insolvency regime to preserve the most value possible for all stakeholders.

Every troubled company situation has its own unique facts and background. Part of our process in working with troubled companies includes:

  • Understanding the client's debt structure, assets and cash flow, and what issue(s) they are facing and why
  • Talking to the client about cash flow and projections, to determine the risk level of the company becoming insolvent and/or tripping loan covenants in the short term
  • Determining whether the client has the time and resources necessary to operationally restructure their way out of an insolvency problem, by increasing revenue and/or decreasing expenses
  • Exploring opportunities to refinance or otherwise address the existing creditor issues among possibly other more definitive steps like a strategic sale, partial divestiture, or similar transaction 

Representative Restructuring Engagements

  1. Workouts and Chapter 11 Bankruptcy
    We represent troubled companies in workouts and bankruptcies (anything from a slightly profitable company with low EBITDA with some aspects of distress to a highly distressed company facing shutdown that requires an immediate infusion of cash to bridge to a sale at liquidation value price, and everything in between).
  2. Distressed Sales
    We represent sellers in distressed sales, most commonly out of court (including Article 9 sales, receivership sales, and assignment for the benefit of creditors sales) but also in court (Chapter 11 bankruptcy "Section 363" sales).
  3. Shareholders
    We represent majority and minority shareholders of troubled companies in workouts and transactions.
  4. Troubled Suppliers
    We represent Tier 1 and 2 troubled suppliers in automotive and non-automotive manufacturing, including out-of-court workouts with lenders, accommodation agreements with customers, and out-of-court and in-court exit strategies including asset sales and reorganizations.
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