- The purpose of a financial review is to give the company, its advisors and its financial and other creditors an up-to-date and accurate understanding of the company's current financial position.
- The review aims to look at the company's prospects going forward, in terms of its profitability, its cashflow, its working capital needs and the ability of management to successfully manage the company out of its difficulties.
- Financial reviews are frequently required by lenders whose customers are in breach of lending covenants or require additional facilities either in association with plans for growth or to help the company address short term cash flow difficulties or losses arising from its operations.
- Corporate Recovery refers to processes which are put in place to help companies in difficulties rehabilitate themselves for the benefit of all its stakeholders, that is its creditors, shareholders, employees, suppliers, customers, contractors etc.
- Every company in difficulty faces a unique set of problems. With that in mind advisers to a distressed company must be able to apply a different set of skills to meet the needs of the individual circumstances.
Scheme of Arrangement
- There are a number of ways in which a distressed company can be rehabilitated. Some are more formal than others, but increasingly, the Scheme of Arrangement process is used at one stage or another.
- It is a process which in recent years has seen many insolvent companies, quite a few of which are listed on the Stock Exchange of Hong Kong, being rescued.
Provisional Liquidation and Liquidation
- We often act as Provisional Liquidators or Liquidators of insolvent companies either in compulsory or voluntary liquidation.
- As Provisional Liquidators in a compulsory liquidation, we are appointed by the Court when a creditor is concerned that the assets of the company are being dissipated or when the company itself recognises that it needs protection from its creditors whilst it seeks to restructure itself.
- As Provisional Liquidators in a voluntary liquidation, we are appointed by directors primarily to safeguard the assets of a company and the interests of its creditors and stakeholders to ensure that assets are not dissipated.
- As Liquidators, appointed by the creditors, our role is:
- To realise the assets of the company for the best possible price;
- To investigate the affairs of the company and if appropriate commence legal proceedings on behalf of the company to ensure that the interests of its creditors are protected and asset realisations are maximised; and,
- To distribute any surplus proceeds to the creditors in accordance with the Companies Ordinance.
- Our team is experienced in quickly understanding the affairs of a company, analysing its financial position and the reasons for its difficulties, and providing management with timely advice setting out the available options, the likely outcomes and the impact of management's decisions on all the company's stakeholders.
- A receiver can be appointed in a number of circumstances. Sometimes a receiver is appointed by a creditor who has a legal charge over assets of the company and he is often referred to in Hong Kong as a private receiver.
- This is in contrast to a Court appointed receiver whose role is often to protect assets whilst legal proceedings are continuing or to search for and locate misappropriated assets.
Bankruptcy and Individual Voluntary Arrangements (“IVAs”)
- We are one of the few corporate advisory firms who have the experience to advise insolvent individuals on the implications of bankruptcy or the operation of the Individual Voluntary Arrangement procedure.
- Our experience in this area can be particularly useful to directors of insolvent companies who have given personal guarantees to creditors and whose potential personal exposure needs to be taken into account in any restructuring of the company.
Our team has been actively involved in corporate recovery assignments in Hong Kong, the PRC and other jurisdictions and are well respected by other professionals. We will work together with the professional advisors and management of distressed companies to develop the appropriate strategies to deal with the specific problems faced by them.