Dealing with your creditors

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Many borrowers face challenges in managing their cash flow and their lending relationships, particularly after the credit boom of the last decade and the tightening markets that have followed.

Businesses go bankrupt when they run out of cash, but many businesses are in fact perfectly sound and can avoid such negative outcomes through formal and appropriate negotiations with their creditors.

Potential issues

  • Talking to creditors is always difficult, particularly in emerging markets where many such discussions can be rather unsophisticated and pressurised.
  • Creditors include your bankers, customers and trading partners. All of them have different expectations and typical behaviours when faced with a potential delay or reduction in what they might receive.

Services we offer

  • PwC is the leading administrator and manager of borrower default situations across the world markets for both large and small borrowers.
  • We get involved in many businesses before default occurs, helping to analyse businesses in light of their obligations to assess how best to avoid default. This can involve rationalising businesses, selling or shutting down certain activities, or re-negotiating contracts before problems pop up. Generally, the earlier we get involved, the more productive our advice can be.
  • If default has happened or is imminent, we usually produce a formal short- and mid-term analysis of a business (“independent business review”) that can be used with creditors as a baseline for negotiations, decisions and next steps.
  • If matters reach a conflict stage, we can usually assist with negotiations and arbitration processes to avoid or minimise formal litigation and to bring the parties to a resolution.

Benefits for our clients

  • Addressing credit issues quickly rescues value for management and shareholders
  • Potential conflict situations are defused
  • Management can focus on the practical steps that to take to move the business forward with the consent and support of the creditors.
 
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