Advanced Debt Restructuring

• A highly timely course that will assist delegates in overcoming problem loans and debt restructuring challenges in the light of the economic fallout from the COVID 19 pandemic.
• Provision of practical and internationally proven methods of identifying Early Warning Signals and Problem loans before they default.
• Reviews a range of applied financial and operational restructuring methods used for workout solutions to problem loans before the client company defaults.
• Provides a full overview of different restructuring options available to bankers given changing economic and market circumstances
• Applies international best practices from some of the Worlds leading international institutions to problem loan workout; what to do and when
• Provides a practical, controlled, step by step guide to the debt restructuring process so that the banker can remain in control
• Allows the delegates to avoid extend and pretend in debt restructuring and the potential need for operating as well as financial restructuring
• Uses cash flow sensitivity analysis and financial modelling to assess different potential restructuring plans and to derive a preferred solution
• Provides a succinct review of the different legal restructuring options available to bankers across Europe and North America

• To understand fundamental concepts in early problem loan workout from major case studies including the collapse of Carillion in the UK.
• Identify Early Warning Signals in spotting potential problem loans
• Identify forward-looking signs of stress particularly defects in companies and mistakes made by management.
• Learning lessons from a number of high-profile problem loan scenarios
• Review the principal international classifications of problem loans
• Apply methods to successfully restructuring and rescheduling problem loans in different international jurisdictions including the EU and US
• Review of different legal.
• Assess the key methods that can be applied to successfully restructuring debt facilities
• Being able to identify the optimum restructuring strategy given the problem loan circumstances
• Apply the IFC framework to the management of the restructuring process
• Identify triggers in deciding whether to work out or to foreclose on the problem client
• How to avoid ‘Extend and Pretend’ and knowing when the Organisational restructuring is essential.
• Optimum application of the Independent Business Review in completing a successful organisational restructuring
• Apply the ‘Standstill’ process in controlling the credit recovery process
• Apply the Standstill Agreement and the cooperation of the other creditors
• Reviewing case studies including Ineos & House of Fraser in applying work-out methods including rescheduling, restructuring, CVAs, Pre-packs, ‘hair cuts’, debt to equity swaps etc.
• Applying different debt restructuring scenarios to a workshop case study financial model.

Session 1 - Introduction to Debt Restructuring – Key drivers

• Overview of the current severe economic climate and its impact on corporate clients in the light of the global Covid 19 Pandemic
• Review of the current position of the leveraged loan market and the rising tide of problem loans and corporate insolvencies in 2020
• The danger of the increased use of ‘covenant light’ loans and the inability of banks to take control of problem loans.
• Non-performing loans and the challenges faced by bankers
• When to recognise the non-performing loan and how to identify the key trigger events for initiating the restructuring process.
• How to deal with problem clients that have not defaulted
• Introduction to a framework to deal with covenant breaches
• Review of the different types of problem loan resolution
• Review of common reasons for company default and the creation of non-performing loans
• Knowing when to ‘pull the trigger’ on the restructuring process
• Understanding the attitude of problem clients and the difference between the ability to pay and willingness to pay
• Identify the triggers in deciding when to restructure/reschedule and when to accelerate.
• Workshop – Advanced discussion of different alternative scenarios in dealing with loans in default and covenant breaches from case study examples. Using the case study of the collapse of Carillion and other high-profile corporate failures to learn how things can go wrong.

Session 2 - Identifying work out solutions versus insolvency solutions

• Reviewing different types of problem loan workout and corporate recovery
• The importance of understanding whether the problem loan can be ‘worked out’ as a going concern and belief in the recovery strategy
• Assessing the two main elements of corporate restructuring, namely financial restructuring and organisational restructuring
• Understanding when financial restructuring is not enough and how to avoid ‘extend and pretend’
• When and who should provide emergency funding to save the going concern
• Review of the increasing use of debt sale as an exit route, its advantages and disadvantages
• Expectations of financial performance and financial covenants under the recovery strategy
• The use and application of sensitivity analysis in understanding the strength of the company’s recovery plan.
• Case Study Workshop – During this session, the delegates will be given a private sector case study to which the aim will be for the attendees to assess whether they believe the company’s recovery strategy and its ability to honour the restructured loan’s debt service going forward.

Session 3 - Early Warning Signals of potential distress

• Review of key financial EWS prevalent across a number of different industries
• Danger levels of different financial covenants in different industries
• EWS derived from the financial statements
• Identification of the manipulation of the financial statements
• Using univariate and multivariate frameworks to identify financial distress
• Application of the Z Score to distressed scenarios to identify potential failure
• Review of the IFC’s classification and a checklist of Early Warning Signals
• The importance of identifying key external factors affecting corporates
• The application of GNPESTEL model to external risk analysis in the context of the global economy in 2018
• Identifying defects and mistakes committed by the company ahead of time
• Management risk and its impact on corporate recovery
• Interrogating problem management and understanding gaps and areas for improvement
• The role, power and limitations of the lender in restoring management effectiveness
• Strategic risk and its impact on the problem client

Session 4 - Review of different restructuring legislation across Europe

• Workshop – Delegates in their project teams will analyse the EWS and external and qualitative risks facing a case study problem loan, providing recommendations for how a lender could seek to improve those risks and protect itself from potential risk crystallisation.

Session 5 - Different restructuring and recovery methodology

• The concept of automatic stay and protection of the going concern from other creditors
• Administration, Receivership and Liquidation
• Automatic stay in administration
• Different rescue procedures
• Key approaches to successful debt restructuring
• Cramdown of creditors
• Position and rights of management
• Personal liability of directors
• Ranking and claims of creditors
• Time limits of filing claims
• Introduction to Standstill Agreements and controlling the banking syndicate
• The popularity and effectiveness of Company Voluntary Agreements
• The use and effectiveness of Pre-packaged Insolvencies (Pre-packs) in certain jurisdictions.
• Case Study Workshop – During this session, the attendees will review a range of case study scenarios including the CVAs of Ineos and House of Fraser in the UK and review the potential application of the different recovery methodology discussed during the session. The delegates in their project groups will also assess how they need to engage with other creditors and assess the drafting of a standstill agreement for the problem loan restructuring.

Session 6 - Review of different restructuring legislation across Europe

• The importance and role of legal counsel in undertaking a successful debt restructuring
• Introduction to principle legal concepts in debt restructuring
• The concept of automatic stay and how it can protect the interest of the creditor
• The importance of the ranking of claims in the debt restructuring process
• Different methods of corporate recovery from Receivership, Administration and Insolvency
• A review of the different legal procedures across Europe in debt restructuring and bankruptcy.
• The importance of controlling the debt restructuring process and handling other bi-lateral lenders including the implementation of ‘Standstill Agreements’
• When creditors can use the principle of ‘cram down’ of minority lenders across different jurisdictions in Europe
• Duties of managers and directors during the restructuring process and how management can be treated across a wide range of European jurisdictions
• The importance of having trust in management as part of the restructuring process
• Different identifiable traits of management behaviour of a company in trouble
• Using the Butler Matrix to decide whether to leave management in place when dealing with the problem loan.
• Workshop – Reviewing a private sector case study problem loan and applying Butler’s matrix to decide how to deal with management as part of the restructuring process.

Session 7 - Implementing the Restructuring process

• Understanding different stakeholder interests and how to manage them as part of the process
• Using a 10-point plan for effective restructuring
• The case for and against a moratorium
• Review of different frames used to select the appropriate restructuring strategy
• Implementation of the IFC framework for Corporate Restructuring
• Workout arrangements and responsibilities within the lending institution
• Protecting security throughout the workout
• Financial projections and sustainable cash flow and debt
• The importance of the Independent Business Review
• How the IBR should be best implemented as part of the Organisation restructuring
• Review and content of the IBR and modus operandi in implementing an effective IBR
• Negotiations and pricing the workout

Sessions 8 - Final Case study - Implementing the restructuring process in practice

• Final Case Study Workshop – Using the case study, the attendees working in their project teams, will provide a complete restructuring/workout solution to the problem loan on the basis of the information covered during the course. They will be required to identify the key EWS inherent in the problem loan, review the sensitivity of the forecast financial projections in the excel model and propose a schedule of the restructured loan. The team will also include terms of a Standstill Agreement, if required and will present their restructuring solutions.

The trainer is a professional banking and finance trainer who for 15 years has been training students in banking, finance, credit analysis, debt restructuring and loan workout, risk management, strategic management and corporate governance compliance. Cooperating with some of the world’s leading training companies, he has trained delegates from some of the largest industrial and financial institutions across Europe and the Middle East. In parallel to his lecturing career, the trainer has a 25-year career in banking and finance, initiated in the City of London. A core element of his work through Capital Advisers is helping companies to restructure their debt and equity position with a view to strengthening company viability through their restructured Balance Sheets. It is this practical hands-on experience of balance sheet restructuring that he brings to the courses and workshops that he develops for clients.

In 1993 he joined Hill Samuel Bank, the London based merchant bank in, covering International Project Finance and later became a credit analyst in Asset Based Finance, lending directly to international shipping companies. He briefly joined N M Rothschild in London as a member of the bank’s LBO credit team analysing clients and providing leveraged debt facilities to UK corporate, before joining Charterhouse Bank in 1997, where he began his Corporate Finance career. Assisting companies to strengthen their balance sheets through debt and equity restructuring has been part of his professional work since he started in banking.

In late 1999 the trainer joined EBRD as the bank’s acting deputy director for Romania. In this role, he led teams of credit analysts in identifying and completing a significant number of credit facilities for Romanian and international companies. During his last year in the post in 2002, EBRD financed a total of €500million in debt and equity financing for projects in the country.

In 2003 he established his own investment banking advisory firm which focuses on credit arrangement, capital restructuring, M&A, private placements and IPO’s. He and his team work with regional and international clients in firstly restructuring client company balance sheets. Central to this role is identifying companies with good potential credit ratings that will be become attractive clients for international banks and financiers. In 2006 his advisory became the exclusive representatives of HSBC Investment Bank in Romania.

In parallel, he initiated his career as a professional lecturer in 2003 applying much of the knowledge that he has built up over his extensive banking career to training and developing banking delegates. He is currently developing a number of tailored courses for leading banking and financial institutions across China, Europe, the Middle East and the Far East. He trains in both English and Spanish.

The global economic crisis engulfing the world economy as a result of the Covid 19 pandemic, will have a deeply damaging impact on national economies and corporate clients alike. Regardless of the depth and intensity of the crisis many corporate clients are going to face severe financial problems at a time when debt levels are at historic highs and the credit cycle was already turning.

This course has been designed for bankers and financiers to develop a holistic, applied approach to early problem loan workouts through a range of different techniques currently applied in the UK and international finance. It aims to provide the attendee with a comprehensive overview of the challenges of problem loan workouts and with an insight into some of the key methods that can be implemented to assist in the recovery of their financial exposure.

By offering a range of different case studies, financing scenarios and potential solutions to workshop case studies, the attendees will be able to develop a broad applied overview of debt restructuring techniques. This is particularly important in an area of finance where ‘one size fits all’ solutions are not possible and where the financier needs to be open-minded, flexible and quick to react to changing circumstances.

The programme draws from the experience of a range of different high-profile debt restructuring case studies and failures, including the recent collapse of Carillion in the UK and the failed CVA of House of Fraser in the UK retail industry. A number of the case studies used during the course are those that have been undertaken directly by the trainer.

The course is highly interactive, with the course attendees working in project teams. They will be required to work in their project teams in devising solutions and providing recommendations to the rest of the delegates who will cross-examine their proposals in a credit committee environment.

During the second day of the programme, the attendees will use forecast cash flow analysis as part of the strategic business review for the restructuring candidate. A knowledge of the working of Microsoft Excel with therefore be an advantage for the attendees.

METHODOLOGY

This online training programme will be delivered through a highly interactive online platform through which the delegates will be able to fully engage with the trainer. The course will be separated into four, 90-minute sessions which will be delivered over two consecutive days.  Delegates will work through case study exercises and questions in project groups and with the course trainer.

The learning techniques will be a mixture of formal presentations, written materials, assignments and case studies with a heavy emphasis on learning through analysing practical examples of corporate loan candidates. All the case studies will be used from real-life working examples and can include client companies of the bank, particularly non-performing loans. Sharing already developed knowledge and learning to work closely in solving practical issues, is a core to the learning methodology of this programme.

The workshop is designed with active delegate participation as a core theme of the workshop. Delegates will be required to present their findings and solutions to their colleagues in class via the screen sharing option available through the online platform. Pre-course reading and preparation will be required of the delegates.

DELEGATE KNOWLEDGE

Delegates are understood to be at an advanced stage of their professional banking careers and have been providing corporate loans to clients for a number of years. It is assumed that all delegates have a highly developed knowledge of financial analysis and holistic credit risk analysis. A good working knowledge of Excel is also an advantage in attending the course, as we will be using financial models to assess the restructuring options of a number of case study questions.