SCG_distressed_key_stabilization

Distressed

Perspective

Maximizing Value Through
Corporate Restructurings

Key Roles Played by Spectrum

Distressed M&A

Recent Transactions

Historical Transactions

Stabilization
Assessments
Interim Financing
Restructuring Plans
Plan Implementation

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Prior to Spectrum’s engagement, the situation for our clients is often somewhat chaotic. If
cash may be viewed as the fuel that powers the engine of a company’s business, its
absence often generates costly operational confusion, inefficiencies and even grinding
disruptions. Liquidity crunches also tend to
engender hostility between the troubled company
and those of its creditors who are not being paid
as agreed. The need to focus on the troubled
company’s cash situation also distracts senior
management from the business itself. As the
business stutters, competitors seize on these
issues and attempt to lure away the troubled
company’s customers, thereby further exacerbating
the situation. This set of circumstances is
sometimes called the “death spiral”.

As a respected, third party professional organization, Spectrum’s appearance in a
financially troubled situation lends the distressed company and its management team a
level of credibility that can be used to help stabilize matters. Working with management,
Spectrum will apprise lenders, the trade and employees of the company’s status.
Spectrum will also often impose new rules on the situation, which, outside of Chapter 11
may include a payment moratorium, in order to assure creditors that by cooperating with
our client they will not be disadvantaged vis-à-vis other like situated creditors.

Spectrum maintains stability during the course of the restructuring by establishing a
communications program that keeps the company’s most important stakeholders
current on significant operating and transactional developments. Among the topics
typically covered under this communication program are actual operating results, the
status of a new business plan, restructuring options, and finally, why the company’s
restructuring plan represents the best available alternative. Ultimately, Spectrum will
assist in re-establishing trust between the troubled company’s management team and
its creditors to convert an adversarial situation into a collaborative one in which the
parties work together toward the best solutions.

Stabilization