Corporate crises lead to a gradual decline in competitiveness, profitability and enterprise value. As the crisis progresses, the pressure to act increases and the scope for action decreases. At the same time, the risk of insolvency increases. In such challenging corporate environments, independent, confidence-building experts form the basis for decision-making and create valuable information for lenders and all other stakeholders.
With our range of services, we support our clients in all unique conditions and prepare expert opinions and statements on restructuring and solvency:
In the accounting process and valuation of assets and liabilities in the annual financial statements, the going concern assumption is generally applied. This so-called going concern premise is to be assumed if the company has generated sustainable profits in the past, it has easy access to financial resources, there is no threat of balance sheet overindebtedness and it intends to continue as a going concern.
If the above-mentioned criteria do not apply or if the risks threatening the company’s existence are identifiable, a going concern forecast under commercial law must be prepared based on integrated corporate planning. The more concrete the indications of an impairment of the company's development are, the more detailed the effects must be analyzed and assessed. The forecast must cover a period of at least 12 months from the reporting date.
If, based on concrete indications, it is necessary to assess whether the cause of insolvency is overindebtedness, a going concern forecast must be prepared under insolvency law. A solvency forecast enables a statement to be made as to whether, in the context of future earnings and liquidity, sufficient financial resources will be available to service the respective liabilities due in the planning period. Based on the liquidity as of the reporting date, the viability of the company within the forecast period is determined on the basis of the corporate concept and the financial plan derived from the integrated planning (balance sheet, income statement and cash flow planning). A positive going concern prognosis exists if the company is capable of settling the liabilities due at any time and the going concern is predominantly probable according to an overall assessment.
The Corporate Stabilization and Restructuring Act (StaRUG), which came into force on January 1, 2021, created a restructuring instrument in German law outside of insolvency proceedings for the first time. This is intended to close the gap between out-of-court restructuring and regular insolvency. The new restructuring framework offers many advantages to companies in crisis: The proceedings do not have to be announced publicly, so reorganization measures can be initiated without being subject to the stigma of insolvency. The legal framework makes it possible to intervene in the rights of certain creditor groups by means of majority decisions, thus preventing blockades by individuals. The restructuring plan forms the basis for intervening in creditor rights.
For companies with a going concern perspective, the preventive restructuring framework represents an additional restructuring instrument aimed at avoiding insolvency and preserving the company. Access to the instruments is linked to the time of impending insolvency. In order to carry out an effective restructuring, the procedure should be included as a potential instrument in the conception and planning at an early stage. We accompany you from the preparation of the proceedings to the implementation of the necessary restructuring measures.
The Corporate Stabilization and Restructuring Act (StaRUG), which came into force on January 1, 2021, created a restructuring instrument in German law outside of insolvency proceedings for the first time. This is intended to close the gap between out-of-court restructuring and regular insolvency. The new restructuring framework offers many advantages to companies in crisis: The proceedings do not have to be announced publicly, so reorganization measures can be initiated without being subject to the stigma of insolvency. The legal framework makes it possible to intervene in the rights of certain creditor groups by means of majority decisions, thus preventing blockades by individuals. The restructuring plan forms the basis for intervening in creditor rights.
For companies with a going concern perspective, the preventive restructuring framework represents an additional restructuring instrument aimed at avoiding insolvency and preserving the company. Access to the instruments is linked to the time of impending insolvency. In order to carry out an effective restructuring, the procedure should be included as a potential instrument in the conception and planning at an early stage. We accompany you from the preparation of the proceedings to the implementation of the necessary restructuring measures.
Especially in challenging business environments, an independent assessment of the current situation is needed. With an objective opinion in the sense of an independent business review, we provide important information about the current situation of the company as well as current options for action. Thus, we create a basis for well-informed decisions for lenders and other stakeholders.
Restructuring and reorganization processes often do not end with the preparation and submission of the expert’s opinion or statement. This follows an implementation phase: negotiations with stakeholders, implementation of planned measures as well as measure tracking in the sense of progress monitoring, which is regularly used for external communication with stakeholders.
In the implementation process, we support our clients from a business perspective based on our comprehensive methodological expertise in the field of project management. Through our expertise, we help to ensure that conceptual measures take effect in a timely manner. In addition, we provide interim management capacities in success-critical areas and functions through experienced WTS Advisory experts.
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