The first step in planning for debt restructure is to have a solid understanding of your monthly cash position as it stands today.
As I stated in a previous article - "Rose-Colored Glasses" - none of us know when this recession or downturn is going to end, so don't guess. In your cash flow analysis, assume it's not going to end for a few years.
Next, following your cash flow analysis, review all of your cost lines to see what you can eliminate, review all of your revenue lines and see what revenues you are missing, and then take a realistic view of what you can afford to pay in debt service.
The next step is to have a fair understanding of the value of your fleet. An appraisal can be done yourself or through a third party, but it must reflect a simple, common-sense appraisal of reasonable market values.
Once you have completed these steps, you can put together a forecast for your company and a restructured debt payment plan which can be presented to your lender (our average client is involved with 18.6 banks, so this is not an easy task and can be quite laborious).
At this point, the debt restructuring process - and the development of your presentation - can become extremely time consuming and you might need outside help. Don't be afraid to find that help. Remember what your strengths are - probably sales or operational - so do what you do best! There are professional firms who understand how the banks work and what their requirements are, and who also have the banking relationships to move this quickly through the restructured loan approval process.
Questions or comments? Contact Mike Farley at [email protected].
