Stone & Baxter’s restructuring practice is primarily a debtors’ practice. For decades, business debtors and their owners have sought out Stone & Baxter’s special expertise in helping clients protect their assets and rehabilitate their troubled companies. Whether responding to urgent litigation, addressing operational problems, or restructuring problem loans or unmanageable debt, our approach to restructuring is simple: We work closely with our clients to identify issues, recommend options, and implement solutions.
Bankruptcy as the Last Option
Sometimes our approach reveals that bankruptcy is not the best option. Commonly, that approach may reveal that there is a cheaper, more efficient, and better non-bankruptcy option. Thus, the hallmark of our workout practice is reserving bankruptcy as the last option and pursuing feasible non-bankruptcy options first. However, there is no one-size-fits-all option for those facing financial distress. It all depends on the issues facing a particular client.
Identifying Financial Distress
Having participated in hundreds, if not more than a thousand, new client interviews, we’ve encountered just about every issue that can trigger or exacerbate business and financial distress, including each of the following issues:
- Looming loan maturities and defaults
- Unmanageable capital structures
- Loss of collateral
- Cash flow shortages
- Liquidity crises
- Outstanding trade debt
- Supplier problems
- Operational problems
- Diminishing revenues
- Increasing expenses
- Shrinking margins
- Regulatory interference
- Tax compliance issues
- Corporate governance fights
- Failed M&A transactions
- Troubled ownership and management transitions
Unfortunately, many of the above issues tend to materialize in groups on an urgent basis and in a manner that even experienced business operators cannot predict. Making matters worse, there is often a driven, well-represented creditor or competing constituency on the other side who is protecting its position, capitalizing on a debtor’s vulnerability, or both. And almost invariably, the confluence of these issues and predatory constituencies occurs when client resources, especially cash flow and time to respond, are most limited.
Choose Your Restructuring Professionals Wisely
The window of success being so narrow and the stakes being so high, it is essential that clients facing a financial crisis engage professionals possessing at least four characteristics:
First, a restructuring professional must have the ability to understand a client’s business challenges very quickly, even in the face of a crisis. Our attorneys have spent decades learning about their clients’ businesses and educating them about an insolvency environment that can be foreign to their usual business experience. As a result of observing thousands of business patterns, we’re just as comfortable working with proactive, sophisticated, well-organized boards of directors as we are working with brand-new sole proprietors whose circumstances are unsettled. Very rarely does it take us more than one meeting to “get up to speed.”
Second, a restructuring professional must have the ability to communicate in plain English each available restructuring option and then, without equivocating, recommend a definitive course of action. On the one hand, our clients appreciate having their restructuring options laid out simply, calmly, and in a business language that they can relate to. On the other hand, our clients come to us seeking more than an education. Rather, they pay for legal advice that is customized to their circumstances. Thus, they find it refreshing that we don’t shy away from answering the question that every client asks but so many attorneys hesitate to answer: “If it were you, then what would you do?”
Third, a restructuring professional must have the ability to own the chosen course of action and implement it without flinching. Successful implementation depends on Stone & Baxter’s deep understanding of commercial transactions, cross-disciplinary knowledge of business law, intimate familiarity with opposing parties and their lawyers, and difference-making negotiating skills. A weakness in any of those areas all too often results in the delay, churning, and inefficiency that sap a client’s precious resources and can spoil even the most well-chosen restructuring solution. Restructuring cannot be successful without focused and deliberate professionals.
Fourth, a restructuring professional must have the experience and the objectivity to recognize that, as often as out-of-court solutions can save time and money and avoid the unpredictability of court-supervised insolvency solutions, they don’t always work. Our clients trust that Stone & Baxter’s results-oriented approach positions us to be vigilant about changing course when necessary. Inexperience and inattention can cause a workout to languish or, worse, eliminate it altogether as an option. Our adversaries understand that bankruptcy is always one alternative course when we’re involved. In fact, the real possibility of bankruptcy bolsters non-bankruptcy solutions.
With Stone & Baxter’s longstanding reputation for each of the above characteristics, hundreds of companies and individuals all over Georgia have engaged Stone & Baxter as their trusted advisor to navigate them through all manner of business and financial distress, regardless of the stakes, the extent of their resources, or the capabilities of opposing parties.