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October 14, 2020

Commercial & Industrial Debt Restructuring Checklist

The COVID-19 pandemic is confronting every level of the U.S. economy with an unprecedented challenge. Given the mounting levels of corporate debt and the uncertain economic outlook, it’s no surprise that the Federal Reserve estimated that bankruptcy filings over the next 12 months will break records.

Bankruptcy is hardly the only or best option for businesses hit hard by the pandemic. In fact, many businesses are planning their recovery by adjusting their capital structure to finance operations and growth. Corporate debt restructuring can be a productive part of a plan to manage debt and improve liquidity.

Corporate debt restructuring depends on many factors—the debtor’s financial management, the expected cash flow and the relationship between the creditor and debtor. If you are considering refinancing existing debt obligations, you will be wise to keep in mind that the process is meant to help both the creditor and debtor. The story you tell can facilitate, even accelerate, the process.

The below checklist is intended to help you prepare your story as completely and persuasively as possible for debt restructuring negotiations.

Essential documents:

  • Financial statements – CPA prepared with all footnotes (last 3 years)
    and/or
  • Federal tax returns (last 3 years), including K1s (if applicable)
  • Most recent interim balance sheet and income statement
  • Monthly projections for next 24 months with cash flow detail (include rationale)

Also consider:

  • Background/history of operations
  • A personal financial statement for all principals having a 20% or more ownership interest
  • Resumes on key management personnel
  • Last three years’ personal tax returns to accompany each personal financial statement

Good information and reports to have available:

  • Accounts receivable aging report by invoice (year-end and most recent)
  • Accounts payable aging report (year-end and most recent)
  • Trailing 12-month balance sheet
  • Trailing 12-month income statement
  • Sources and uses of loan proceeds
  • Detailed customer list (name, address, phone number & contact person)
  • Detailed inventory report
  • Details of existing debt situation (include rates, terms, collateral, guarantors, etc.)
  • Landlord info (name & phone number)
  • Lease info (annual rent payments, status, etc.)
  • Bank statements (last 6 months)

Your Team

Wherever you are on the recovery spectrum, CBIZ can help. Feel free to reach out to Michael Caron (610-862-2335) or the CBIZ Credit Risk Services team for a no-risk conversation or additional information. For ongoing coverage of the impacts of COVID-19 and actions to take to safeguard and stabilize your organization, visit our COVID-19 Resource Center and Accelerated Recovery Resource Center.

Accelerated Recovery Resources

Access articles and tools to help your business generate cash, improve leverage, and align & transform as you recover from the pandemic.

COVID-19 Resources

Access all COVID-19 related articles to help your business respond to the pandemic.

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