In order to answer these questions, a certain amount of expertise and experience is required, which is why the supreme court's jurisdiction sees the use of external specialists. Particularly because a corporate crisis can lead to numerous legal problems, the implications of which need to be considered. Examples of this are insolvency law and labour law.
Moreover, the requirements formulated by the Federal Court of Justice in its previous case law must be observed.
In short, the forecast on the feasibility of restructuring must be made by an unbiased and qualified third party.
To determine the company's ability to continue as a going concern with a view to a possible risk of insolvency.
The ability of the company to restructure with a view to its competitiveness.
In other words (beware, this can get a little technical): "The ability to continue as a going concern" exists if the company is fully financed in the forecast period of the restructuring concept - i.e. there is no threat of insolvency!
With regard to reorganization or competitiveness, the following applies: Competitiveness is given if the company can refinance itself on the market. This requires both an adequate return and an adequate equity capital.
An important prerequisite for both "restructuring stages": If there is acute illiquidity, countermeasures must be defined and implemented within a maximum of two to three weeks.
The purpose of an appraisal of companies in crisis is primarily to determine how the crisis has come about and what stage of the crisis the company is in – and particularly to clarify whether there is a risk of insolvency.
For this purpose, the net assets, financial position and results of operations of the company must be determined and evaluated. Of course, the assessment of the company's own figures must be carried out with a view to the competitive environment. Among other things, it has to be determined what the usual level of returns for the industry is and what the equity capital situation of the company is like.
Only once this basic information is available and there is a reasonable prospect of a successful continuation of the business activity ("positive continuation forecast") can the actual restructuring work begin:
a) Elaboration and presentation of a mission statement for the restructured company including the value-creating business model required for this purpose.
b) Derived from this, the measures to avert the risk of insolvency (if necessary) are scheduled and quantified to establish the target status defined in the mission statement.
c) Integrated liquidity, earnings and asset planning is particularly important for financiers.
In addition to these key operational and financial data, the restructuring report or restructuring concept should also contain concrete answers to questions such as the impact of digitalization on the business model.
The quality of the restructuring report according to IDW S6 is decisive for further external financing and thus for securing the future of a company in phases of upheaval and crisis.
However, this also makes the quality of the restructuring consultant critical to success.
Struktur Management Partner GmbH has specialised in the turnaround and growth management of companies in challenging situations for almost forty years and has an outstanding reputation among corporate leaders, financiers and specialist lawyers.
As a company with the greatest experience in the market, especially in the German SME sector, we not only guarantee a pragmatically implementable restructuring concept; we also accompany all implementation and turnaround measures and ensure their transparency, effectiveness and sustainability right from the start.
You can take our word for it!