Company solvency restoration

Solvency is a company ability to execute in time and fully all obligations, not troubling the process of normal business activity.
A necessity for this project could arise both in the case of current systematic problems with payments on current liabilities and in the case of such problems threat.

Project on company solvency restoration proposed by Desonn Partners is focused on two aspects:

• Current solvency restoration
• Future solvency loss prevention

In response to these tasks, Desonn Partners consultants carry out the followings types of works togather with the Client's project team:

• Company current status examination
• Development of solvency restoration operative actions plan
• Company expenses optimization
• Accounts payable restructuring
• Actions on accounts receivable repayment
• Legal support of claim-related work
• Sales and purchasing policy regarding payments postponement
• Investment projects updating
• Excess inventories and non-core assets disposal
• Cash flows short-term budget development
• Carrying out of other short-term actions on solvency restoration
• Development of long-term actions plan aimed to increase business efficiency in new conditions

We propose the followings stages in this project:

Stage 1: Preparatory stage

At this stage the project objectives has to be approved by company management, the project team members should be appointed from the Client side, the project plan is to be developed.

Stage 2: Company diagnostics

Consultants conduct an interview with owners and top-managers, analyze information about the enterprise and determine the key solvency problems in short- and long-term perspective.

Within the task of current solvency restoration the detailed analysis is conducted in the following aspects:

• company liabilities to financial institutions
• accounts receivable and accounts payable
• cash flows for the 6 months
• inventory holdings dynamics for the 6 months
• costs structure for the 6 months
• started investment projects close out

Within the task of business strategic financial stability provision the analysis is conducted in the following aspects:

• corporate and marketing strategies
• distribution system and client base
• organizational structure
• profitability of products and segments
• list of fixed assets
• inventory turnover

Duration of this stage is 2-3 weeks.

Stage 3: Development of action plan on solvency restoration

The conclusions of the conducted diagnostics are considered on project team meetings as a result of which the following actions are developed:

• Detailed plan of operative actions on solvency restoration with terms and responsible persons

This plan includes actions in such directions as: payables and receivables, inventories, current expenses, investments

• Cash flows short-term budget including operating, investing and financing activities

This budget is composed taking into account the developed plan of operative actions on solvency restoration. Within operating activity all payments to suppliers are assumed in accordance with the plan of accounts payable restructuring. Payments on investing activity are incurred according to approved actions plan on investment projects completion. Payments on financing activity are provided according to restructured loans.

• Long-term actions plan on the activity efficiency increasing

This plan include actions in such directions as: optimization of sales structure and distribution channels, further costs reduction, efficiency of fixed assets using, organizational structure optimization, company reorganization, additional financing attraction

Duration of this stage is 2-3 weeks.

Stage 4: Implementation of action plan on solvency restoration

Implementation of action plan on solvency restoration is conducted by Client's project team together with consultants.
At this stage, Desonn Partners conducts weekly control on fulfilling the action plan and implementation of cash flow short-term budget. Documents developed by consultants jointly with the Client's team are updated.

Moreover, we are ready to provide services in support of claim-related work with accounts receivable.
If long-term actions plan includes business reorganization with future sale of business directions or direct investments attraction, Desonn Partners is ready to undertake further support in these projects.

Administration in solvency restoration

We are ready to offer support in company solvency restoration process that is carryed out with implementation of the arbitration procedures set in the Law of Ukraine «On Restoring a Debtor's Solvency or Recognizing it a Bankrupt».

Solvency restoration of corporate borrower

If a company has large debt on bank loans, and difficulties with paying it back in normal economic activity, we suggest the procedure of solvency restoration agreed with a bank (read more...)