Troubled Companies Research Articles

Management of Corporate Distressed Debt: From Terminology to Statistics

The aim of the paper is to systematize definitive approaches of “problem (distressed) debt” and related terms in order to create a conceptual apparatus useful from the point of view of management entities, as well as to statistically study the dynamics and sectoral structure of problem debt based on the banking sector performance indicators in Russia and other countries in 2009–2023. As a result of the analysis of international and Russian documents in the field of banking regulation, two types of problem debt typologies have been identified: classifications of credit risk of the supervisory authority and recommendations of internal credit risk. Two approaches to the definition of “problem (distressed) debt” have been identified: a regulatory (accounting) approach based on the requirements of regulatory authorities and reporting standards; an identification approach that includes a list of various signs of problems. As a result of the synthesis of approaches, the article proposes the author’s understanding of the terms “overdue debt (credit)”, “problem (distressed) debt” and “problem asset”, taking into account the subject composition of debt managers, represented not only by banks, but also by trade creditors. As part of the preparation of the statistical review for 15 years, a constant excess of the share of “bad” loans (with no probability of repayment and complete depreciation of debt) over “problematic” ones was revealed, which confirms the low effectiveness of the banks’ preventive work to prevent borrowers from becoming problematic (troubled). The authors analyzed the dynamics of the ratio of non-performing loans (NPL) to the total volume of loans issued in 28 countries of the world, revealed a relatively high proportion of the indicator in Russia in recent years. An assessment of the sectoral debt structure of Russian companies showed the dominant position of the manufacturing industry, whereas in the structure of overdue debts, the main companies are from the real estate, wholesale and retail trade sectors. The work of credit institutions to manage problem debts is an important issue of ensuring the economic security of the state and should include monitoring the condition of borrowers based on a strategic map and a comprehensive analysis model, using the methodology of managing transformational projects for the financial recovery of troubled companies.

RETRACTED ARTICLE: COVID-19 Forecast and Bank Credit Decision Model Based on BiLSTM-Attention Network

The COVID-19 pandemic has caused drastic fluctuations in the economies of various countries. Meanwhile, the governments’ ability to save the economy depends on how banks provide credit to troubled companies. Therefore, the impact of the epidemic on bank credit and inclusive finance are worth exploring. However, most of the existing studies focus on the reform of the financial and economic system, only paying attention to the theoretical mechanism analysis and effect adjustment, scant data support, and insufficient scheme landing. At the same time, with the rise and rapid development of artificial intelligence technology in recent years, all walks of life have introduced it into real scenes for multi-source heterogeneous big data analysis and decision-making assistance. Therefore, we first take the Chinese mainland as an example in this paper. By studying the impact of the epidemic on bank credit preference and the mechanism of inclusive finance, we can provide objective decision-making basis for the financial system in the post-epidemic era to better flow credit funds into various entities and form a new perspective for related research. Then, we put forward a model based on Bi-directional Long Short-term Memory Network (BiLSTM) and Attention Mechanism to predict the number of newly diagnosed cases during the COVID-19 pandemic every day. It is not only suitable for COVID-19 pandemic data characterized by time series and nonlinearity, but also can adaptively select the most relevant input data by introducing an Attention Mechanism, which can solve the problems of huge calculation and inaccurate prediction results. Finally, through experiments and empirical research, we draw the following conclusions: (1) The impact of the COVID-19 pandemic will promote enterprises to increase credit. (2) Banks provide more credit to large enterprises. (3) The epidemic has different impacts on credit in different regions, with the most significant one on central China. (4) Banks tend to provide more credit to manufacturing industries under the epidemic. (5) Digital inclusive finance plays a (positive) regulating effect on bank credit in COVID-19 pandemic. Inspired by the research results, policymakers can consider further solving the information asymmetry and strengthening the construction of a credit system, and more direct financial support policies for enterprises should be adopted. (6) By adopting the COVID-19 prediction model based on the BiLSTM-Attention network to accurately predict the epidemic situation in the COVID-19 pandemic, it can provide an important basis for the formulation of epidemic prevention and control policies.

أثر الوسائل المادية في إنقاذ المشاريع التجارية المتعثرة

Giving troubled commercial projects legal opportunities to rearrange their affairs, and then return them to commercial life is similar to returning the dying person to his normal life. The commercial law is either a cause of bankruptcy which causes many employees layoff or it can give a legal chance as to make the merchant make use of his mistakes and back to his work. It is necessary to find solutions represented by means that prevent bankruptcy on stumbling projects, and at the forefront of these material means is the release of the debts, which represents a real guarantee to get out of the financial crisis of these commercial projects, through which it is possible to convince the mass of creditors to absolve the troubled project or company from debts, as well as the release. The acquisition method can be relied on to save the troubled projects, and this requires that there be an agreement Effective control, according to legal procedures, by a company with a strong financial position, over a reluctant, sick, troubled company.

The economics of prepackaged bankruptcy

The economics of prepackaged bankruptcy

Research on Financial Early Warning Based on Combination Forecasting Model

Since entering the 21st century, “economic globalization” has become a hot topic. Under the impact of “economic globalization”, the competition of the Chinese domestic market continues to intensify, and Chinese enterprises are facing enormous pressure for survival and development. Among them, there are many cases of poor business operation caused by financial crisis which have directly put these companies in trouble, even causing them to go bankrupt. Therefore, it is very practical to establish a scientific data model to analyze and predict the financial data of enterprises. It can not only monitor the financial status of the enterprise in real time, but also play an effective financial early warning role. This research focuses on using the combined forecasting method to establish a more comprehensive financial early warning model to solve the related financial crisis forecasting problem. Specifically, two different forecasting methods are first adopted in this study to conduct financial early warning research. The first is time series forecasting. It is a dynamic data processing statistical method, which is often used in forecasting research in the business field. The second is the BP neural network algorithm (referred to as BP), which is an error back-propagation learning algorithm, which is often used in the field of artificial intelligence. Then, the prediction error values of the two methods are compared and they are applied to the combined prediction method. Finally, a new error prediction formula is obtained. The result shows that the BP method provides the best performance over others, while the combinational forecasting method offers better performance than any single method.

Enterprise Financial Asset Risk Measurement Based on Embedded Microprocessor Security Analysis

As the volatility of financial markets continues to increase, the risk structure involved in financial derivatives has become more and more complex. The harmful effects of financial risks can put the company in trouble. Only by understanding the correlation between financial assets can we more accurately measure the risk of a company’s financial assets. This article is aimed at studying the company’s financial asset risk measurement method based on integrated microprocessor security analysis, so that enterprises can effectively manage the risk of financial assets. This paper randomly selects 10 variables related to demographic characteristics, customer needs, and consumption characteristics of 850 customers from the historical customer data of a bank that has been abandoned for customer market segmentation research. Based on the theoretical basis of customer value evaluation, the factor analysis method refers to a multivariate statistical analysis method that starts from the internal dependence relationship of the research index correlation matrix and reduces some variables with overlapping information and intricate relationships into a few unrelated comprehensive factors. The basic idea is to group variables according to the size of the correlation, so that the correlation between the variables in the same group is higher, but the variables of different groups are not correlated or correlated, and each group of variables represents a basic structure—the common factor. This paper uses the factor analysis model in statistical principles to analyze the main factors affecting the pricing of deposit products, and we can obtain three quantitative common factors: customers related to the customer’s willingness to pay demand value, customer loyalty factor, and customer cost factor. Then, the variance contribution rate of the three factors to all observable variables is weighted and converted into the net customer relationship value, at the same time, the embedded microprocessor evolved from the CPU in the general-purpose computer. Its characteristic is that it has a 32-bit or more processor and has high performance. In actual embedded applications, it only retains closeness to embedded applications. Related functional hardware, removing other redundant functional parts so that the special requirements of embedded applications can be realized with the lowest power consumption and resources. Before constructing the structural equation model, it is necessary to test the reliability and validity of the sample data. The data selected in this paper are panel data. In order to judge whether the data is stable, the panel unit root test should be carried out. This article chooses LLC to verify the stability of the panel data. Individual fixed effects and linear time trends are added to the test, and the lag order of the difference lag is 0. Among the intermediary business income of joint-stock commercial banks, bank card fee income accounts for the largest proportion, with China Everbright Bank accounting for 70.12% and China CITIC Bank accounting for 54.16%. The research results show that with the continuous increase of Internet penetration rate, the impact of corporate finance on commercial banks shows phased characteristics. The corporate financial risk measurement method studied in this paper can provide effective help for risk monitoring and early warning. Risk measurement is a management activity that uses certain methods to determine and quantify the possibility of a company’s future financial results deviating from expected financial goals due to various uncertain factors. In practice, it is generally analyzed by a combination of qualitative and quantitative, subjective, and objective methods.

No reliance on guidance: counter‐signaling in management forecasts

AbstractThis study presents and provides an explanation for a novel stylized fact: both high‐performing and troubled companies withhold issuing earnings guidance. We assume that the manager's ability affects the level of earnings and the accuracy of guidance, but issuing a forecast is costless for all manager types. Managers are thus able to signal their ability through accuracy in their forecasts. While high ability managers would seem to benefit the most from issuing guidance, in equilibrium we find that both high and low ability managers withhold issuing guidance, while intermediate types forecast. Hence, high ability managers counter‐signal in equilibrium, which does not result in a subsequent “punishment” by the market.

CEO succession with gender change in troubled companies: The effect of a new woman CEO on firm risk and firm risk perceived

The replacement of the CEO is one of the first actions a troubled company may take to recover from a critical situation. In this paper, we analyze the change in firm risk and firm risk perception when women are replacing men as CEOs of troubled companies. The analyses are based on a comprehensive dataset covering all registered companies in Norway from 2005 to 2014. We argue that a new woman CEOs increase the chances of improving the risk situation of troubled companies. Building on CEO succession and social identity theories, we study the firm risk situation under the lenses of risk perception and firm risk, and we find that a newly appointed woman CEO, following a man, tend to decrease the level of risk of the company. Furthermore, we find counterbalancing effects on these changes given the moderation effect of women on the board.

Too-big-to-fail: The value of government guarantee

Following the 2008 financial crisis and the government bailout of troubled companies, Too-Big-to-Fail became a standard expression to name a free protection of Wall Street by tax-payers' money. What should have been the fair cost of this protection? We offer a novel approach to estimate the value of the implicit government guarantee by combining the contingent claim pricing with the likelihood of the government intervention. We find that the cost of this implicit protection can go beyond tens of billions of dollars with an average of about $13 million per company, per year, and it rises to about $24 million if the government is assumed to intervene with certainty. Moreover, we show that the spread of the funding costs of the large banks over the small banks is strongly inversely associated with the value of the implicit government guarantee, especially after the crisis. For the Chinese companies, we use the contingent claims approach to measure the government guarantee and find that the value of the guarantee for State-owned Enterprises (SOEs) is inversely related to their bond yield spreads.

Fighting organizational decline: a risk-based approach to organizational anti-aging

PurposeMost mature organizations face a major decline in performance at some time during their existence. For more than three decades, it has been suggested that the management practices that could cure a troubled company could have also kept it well. Inspired by this concept, this paper is proposing a preventive approach to early implementation of turnaround strategies as an alternative for otherwise traumatic rescue efforts, further along the downward spiral.Design/methodology/approachCorporate turnaround strategies and associated risks are integrated with a risk-based approach, along with a proactive decision-making process. The link between turnaround research, resource-based view, the sources of organizational decline, and the governance of organizational-decline-related risks – is explained.FindingsThe integrated model streamlines a preventive organizational process for considering the suitability of commonly used turnaround practices – for the non-crisis business routine of a mature company. By considering and adjusting the risks associated with such practices, it addresses risk aversion at the early stages of decline and determines the optimal sequence and timing of retrenchment and recovery activities. As such, it encourages mature companies to take actions for reducing their exposure to organizational decline. Accordingly, the model is named the “Anti-Aging” framework.Research limitations/implicationsEmpirical testing of the suitability of turnaround strategies for non-crisis situations is proposed as a direction for future research.Practical implicationsThe Anti-Aging framework opens an opportunity for the senior management of a mature organization to respond earlier to organizational decline and avoid the trauma associated with otherwise more challenging conditions, for the benefit of all stakeholders.Originality/valueThe Anti-Aging framework proposes an innovative way of bridging the gap between the benefits of early implementation of turnaround strategies, and major obstacles faced by willing, traditional management teams of mature organizations.

Do we have to downsize – does the empirical evidence suggest any alternatives?

PurposeGiven a growing literature indicating that downsizing is not an effective way to address financial decline, having either little impact or negative impact on the financial health or market valuation of financially troubled companies, what is the alternative for those companies in financial trouble? Three sets of alternatives to downsizing are available to companies suffering financial trouble: strategies addressing personnel/fix costs, strategies focused on addressing cost cutting/variable costs and strategies addressing strategic planning/revenue. Although alternatives to downsizing have been identified, little research has been conducted comparing the impact of downsizing vs alternatives to downsizing on firm performance. The paper aims to discuss this issue.Design/methodology/approachThis present study looked solely at strategies focused on addressing personnel/fix costs. Focusing primarily on forced attrition (downsizing) vs temporary attrition and/or natural attrition, this research attempts to determine whether specific groupings of alternatives to downsizing are more effective at addressing financial decline that companies find themselves in as compared to downsizing. This included relying on temporary attrition, natural attrition or doing nothing at all.FindingsThe research presented here indicates that various alternatives to downsizing have an immediate positive impact on measures of profitability and a positive long-term impact on one measure of efficiency: revenue per employee. Evidence shows that temporary attrition leads to better financial outcomes than natural attrition than forced attrition or downsizing.Originality/valueThe research presented here indicates that various alternatives to downsizing have an immediate positive impact on measures of profitability and a positive long-term impact on one measure of efficiency: revenue per employee. This has implications for managers put in the position of having to make a decision whether to downsize or not.

Tracing Equity: Realizing and Allocating Value in Chapter 11

Law and economics scholars have long argued that efficiency is best served when a firm’s capital structure is arranged as a single hierarchical value waterfall. In such a regime, claimants with seniority are made whole before the next-junior stakeholders receive anything. To implement this single waterfall approach, those scholars envision a property-based mechanism: a blanket lien on all of a firm’s assets, and therefore all of its value (including as a going-concern). This view informs current proposals for contractual bankruptcy and relative priority. Coincident with this scholarship, lawyers, scholars, and judges have largely accepted at face value the proposition that Article 9 of the Uniform Commercial Code implements the single waterfall. In other words, they assume that the law allows a secured lender to write contracts that enable it to capture all of a distressed company’s going-concern value. This assumption has placed “senior” secured lenders firmly in the driver’s seat when a firm falls into distress. So-called “senior” creditors claim priority in all of the value, and control over all of the cash. They often advocate a quick sale of the firm as a going concern, or liquidation of its assets, followed by a structured dismissal of the case, giving all of the value to the secured lender. In this article, we illustrate that Article 9 does not, in fact, implement the single waterfall principle. Instead, both Article 9 and the federal Bankruptcy Code maintain a distinction between priority based on the firm’s assets and claims to the residual value of the firm. Whenever the firm continues in operation, there will be two value waterfalls – one tied to assets, and the other not. The second waterfall consists of the going-concern and other value of the firm Chapter 11 preserves. The key legal (often forgotten) concept that maintains this distinction is “equitable tracing” – required by both Article 9 and Chapter 11. The terms “equitable principles” in Article 9 and “equities of the case” in Chapter 11 refer to equitable tracing principles, that, in turn, inform secured creditors’ “fair and equitable” baseline entitlement in a Chapter 11 plan. On the petition date, the value of the firm is therefore divided into two categories: value traceable to encumbered assets; and, other value. This relationship must then be managed over time, as the value of the firm changes. Chapter 11, accordingly, treats realization of value as a two-step process that we call “Equitable Realization.” Equitable Realization uses tracing principles to allocate a firm’s value between asset-based and firm-based claimants and to preserve that allocation over time. First, it fixes the relative positions of secured and unsecured claims when a bankruptcy petition is filed. Second, it delays the fixing of the value of secured claims until collateral is sold or a Chapter 11 plan is confirmed. The value of the secured creditor’s collateral may increase, but the secured creditor’s entitlement to any bankruptcy-created value extends only to “identifiable proceeds” – value that can be traced to assets encumbered on the petition date. As a result, increases in going-concern value of the company in this period, and other bankruptcy-created value more generally, are not within a lender’s collateral package. Any going-concern value created or preserved by Chapter 11 is allocated to the bankruptcy estate for the benefit of all stakeholders—workers, retirees, customers, and more. We then address whether Article 9 and the Bankruptcy Code took the right approach by choosing Equitable Realization over the single waterfall. Many scholars, all the way back to Grant Gilmore, have questioned the wisdom of the single waterfall. Joining and expanding on those scholars’ concerns, we explain the benefits of Equitable Realization, and how the concept resonates with a large family of corporate and commercial law rules that guard against undercapitalization and judgment proofing. Equitable Realization not only implements the Bankruptcy Code’s core goal of equitable treatment of creditors, but, by properly identifying firms’ residual claimants, limits a firm’s ability to externalize risk and increases the prospect of reorganizing troubled companies. The last task of this article is to test our insights against the value-allocation proposals in the Final Report of the American Bankruptcy Institute Commission to Study the Reform of Chapter 11, as well as priority-related proposals in academic scholarship. Many of the Commission’s proposals are consistent with Equitable Realization. But one proposal in particular, redemption option priority, allocates too much to secured creditors relative to our interpretation of current law.

Fighting recession at the expense of access to justice

It is hard to remember when the last time was that one legal document raised as much controversy among legal and economic experts, entrepreneurs and wider public as it is the case with the Act on Financial Operations and Pre-Bankruptcy Settlements (AFOPS). As stated by the Croatian Government at the time of its delivery, the primary aim of the pre-bankruptcy (or insolvency) settlement proceedings was to help troubled companies to revitalize their businesses, keep jobs and to help creditors to recover their claims in a larger proportion than it would be possible if standard bankruptcy proceedings were applied to troubled companies. The fact that two different organs, one professional and one juridical have been conducting pre-bankruptcy settlement proceedings in different stages gives rise to different questions in relation to the right to a fair trial and access to courts as guaranteed by the European Convention for Protection of Human Rights and its related case law. In particular, we shall discuss whether PBS committees constituted “tribunals” in the Conventional context and whether European Convention allows the prior intervention of professional bodies in disputes over civil rights and obligations. Last, but not least, we need to check the powers and the role of commercial courts in confi rming the settlement agreements, bearing in mind that only if the access to a court with full jurisdiction is ensured, the lawfulness of the procedure is provided and secured.

Development and Impact of Chinese Investment in EU

Abstract In this paper examines the roles and influence of China in the world and, mainly, in European Union. For a decade, Chinese investors have been looking for opportunities to buy european assets. Especially since the beginning of the 2008 crisis we observed an increase of investment activities of Chinese companies. During the crisis, cash troubled european companies due to loss of liquidity were forced to sell their shares at significant discount. Over time, with stabilizing the economic situation in Europe, European companies asset prices seemingly ceased to be cheap, nevertheless a volume of Chinese FDI to Europe continued to grow. Our goal will be detailed insight into these investments and try to identify the benefits and risks of these investments. Moreover, this paper not only provide insight into economic development of Chinese FDI but also take into account political issues and background of these investment. As far as a methodology is concerned, the basis of our work will be comparing an impact of Chinese investments in European countries and their impact on economic development in selected countries. In particular, we are interested in the behavior of Chinese investors and their motivation to buy in Europe. At the same time it will also be interested in the motives of European companies that have decided to sell shares to new owners. Finally, we will also examine ways in which Chinese investors proceed with acquisitions in the EU. Data comes from Eurostat, the national statistical offices and stock market prices. We will also be examining the political influence on these countries individually and globally, therefore as part of the EU. Based on the gained information we will try to assess the current situation of China’s influence in the euro area and at the same time try to estimate its future impact. Finally, based on the detected information to analyze the results of our research.

PAC (PREVENTIVE ARRANGEMENT WITH CREDITORS): A TOOL TO SAFEGUARD THE ENTERPRISE VALUE.

Italian Insolvency Law has been widely reformed since 2005 in order to introduce new legal procedures aimed at preserving troubled companies, discerning viable from irredeemable businesses, and increasing productivity through a more efficient management of insolvency proceedings. The excessive duration of bankruptcy cases was repeatedly brought to the attention of the European Court of Human Rights, relating to the right to a fair trial in terms of reasonable duration. After the reform, the Preventive Arrangement with Creditors (Concordato Preventivo) became Italy’s equivalent of US’s Chapter 11 and can be considered the main instrument used by small and medium-sized companies (and sometimes large ones) to manage insolvency by avoiding bankruptcy. This paper provides an empirical analysis on filing of Preventive Arrangements with Creditors in the Court of Milan, one of the largest courts in Italy, in the 2005-2014 period. Through the exam of 720 cases, 60% of the total number, the research shows the different features of the procedure, analyzes the characteristics of companies that resort to it and its diverse purposes of liquidation or restructuring. Due largely to the newness of the legislation, along with the complexity of the Italian system, it is rather difficult to generalize conclusions. Nevertheless, the paper shows how Preventive Arrangements with Creditors can be considered a more efficient instrument than the alternative bankruptcy, both in terms of timeframe as well as with creditors‘ satisfaction. As part of the overall European reform process of insolvency proceedings, following the 2014 Recommendation issued by the European Commission, Italy seems to provide useful insights for other countries in Europe.

Evaluating the Information Value for Measures of Systemic Conditions

Timely identification of coincident systemic conditions and forward-looking capacity to anticipate adverse developments are critical for macroprudential policy. Despite clear recognition of these factors in literature, an evaluation methodology and empirical tests for the information value of coincident measures are lacking. This paper provides a twofold contribution to the literature: (i) a general-purpose evaluation framework for assessing information value for measures of systemic conditions, and (ii) an empirical assessment of the information value for several alternative measures of US systemic conditions. We find substantial differences among the measures, of which the Cleveland Financial Stress Index shows best-in-class identification performance. In terms of forecasting performance, Kamakura?s Troubled Company Index, Cleveland Financial Stress Index, and Goldman Sachs Financial Conditions Index show moderately stable usefulness metrics over time.

Untrained Supervisors Get a Company in Trouble

An employer violated the National Labor Relations Act when its shift supervisor and lead supervisor summoned an employee to the supervisor's office and asked if he “knew or had heard anybody talking or trying to bring in the union.” He was also instructed to report back if he heard any union talk.

The Effects Of Hindsight Bias On Experienced And Inexperienced Auditors' Relevance Ratings Of Adverse Factors Versus Mitigating Factors

<p>Hindsight bias is the tendency for individuals who have been provided with the outcome of an uncertain event to systematically overstate their abilities to have predicted that outcome in foresight. Individuals also rate cues supporting this known outcome as more relevant than the cues supporting alternative outcomes. In an experiment using the case data of a troubled company, the current study explores the effects of outcome information on both experienced and inexperienced auditors' going-concern judgments (i.e., whether or not they believed the company would succeed or fail within one year) and the extent to which the outcome information influences the auditors' relevance ratings of the case cues and whether this effect is greater for experienced auditors as compared to inexperienced auditors. The current study predicts that in this task, auditors' implicit knowledge of the differential costs associated with alternative audit decision errors, coupled with the nature of auditor training, will influence their cognitive processing, leading to results that differ from prior psychological studies in a systematic manner.</p> <p>Specifically, the current study predicted and found that despite the outcome information provided, both experienced and inexperienced auditors rated failure cues (i.e., adverse factors) as more relevant than success cues (i.e., mitigating factors); the effect was not greater for experienced auditors. However, the current study also predicted and found that due to hindsight bias, auditors, who are provided with the failure outcome, were more likely to rate the adverse factors as more relevant than the mitigating factors than did the auditors who were not provided with outcome information.</p>

Corporate Governance at Nortel Revisiting Board Functions

The current model in corporate governance theory is predicated on management by CEO and a team of executives, with directors in charge of oversight and monitoring. Corporate law endorses this model by authorizing directors to supervise management, rather than manage corporations by themselves. This article surveys board oversight at Nortel Networks, the failed Canadian technology giant, to assess the adequacy of the prescription about monitoring in governance theory. The hypothesis about boards and their functions are evaluated with reference to the following events at Nortel: Churn in CEOs and succession planning; Business acquisitions strategy; Accounting restatements and investigation; Business oversight and bankruptcy filing.Insufficient attention to board engagement with business and strategy is identified as a shortcoming in current theory. Boards would be the last line of defence in troubled companies. The Nortel experience suggests that boards that are mostly independent and the bare monitoring function might not be adequate as universal principles, particularly in troubled, under-performing companies. The issue with independent directors and their function as monitors would be especially acute in a corporation facing leadership instability and business challenges, and is in need of re-strategizing for the medium and long term. Situations of this nature illustrate how boards can better serve corporations and their stakeholders through greater engagement with business strategy and being more proactive as necessary.The article proposes the creation of a new board committee to deal with business and strategy. This committee will constantly monitor the business of the corporate enterprise and participate in strategy development. By doing so, boards can contribute to assuring a profitable enterprise that is commercially sound and sustainable. The proposal is based on the current system of board committees and it addresses board responsibility for business and strategy – an issue that receives limited attention in the prevailing framework.

Distressed Acquisitions: Sometimes Boast AnUncanny Resemblance To Three-Card Monte … YouCan Lose The Moment You Decide ToEnter The Game!

These days, many first-time distressed investors will rush to scoop up incredible opportunities without apprehension. It must be easy, they think. We?ll just buy low, operate our way through the upturn, and sell high. Plus, multiples will be higher at exit, and we can refinance when credit eases. Everything will go according to plan. After all, control investments in troubled companies just need a new management team and some cost cutting, right? Caveat emptor … there are many tripwires and pitfalls in the distressed investing jungle. In this article, we share some tidbits gathered along our journey as both corporate performance experts and distressed private equity professionals. <b>TOPICS:</b>Private equity, wealth management