Advice to Ailing Companies
In an ailing company, the management must be prepared for any decisions which it makes to be closely scrutinised. The management is required to look after the interests of creditors to a much greater extent and must act accordingly.
When a company is in a crisis, wrong decisions can be fatal for the company and have an impact on the personal finances of members of management as well.
In the event of the subsequent bankruptcy of the company, the decisions made by the management of an ailing company will be subjected to close scrutiny by the liquidator. In these situations, it is therefore particularly important to act correctly as management and, for example, not to cause a loss for creditors or treat some creditors more favourably than others. The company management must be careful not to incur new debt.
We are highly familiar with the issues facing ailing companies, and we can therefore advise company managements about what they should and should not do. As advisers, we play an active role and help facilitate dialogue with the most important stakeholders.
At TVC Law Firm, our top priority is to ensure that members of management act responsibly, while at the same time helping to find a solution which can ensure the survival of the company.
The ability to find the right solution depends essentially on understanding the various parties, their risks and backgrounds. It is frequently also necessary to help ensure that the parties understand their own risks. Only once everybody has understood the risks inherent in the financial collapse of the company, is it possible to find a solution which is acceptable to all parties concerned.
Sometimes the ailing company does not survive. In such a situation, we help to ensure that no criticism can subsequently be levelled against management for its actions in the difficult period at the end.