Restructurings and Distressed Investing — Planning the Perfect Exit

Latham & Watkins LLP

Investors must address several key issues at the outset of a restructuring to smooth the path to a successful realisation of their investment.

The classic image of a restructuring situation is of the critically ill patient struggling to survive. All efforts are focussed on right-sizing the balance sheet to save the company from total collapse. However, this over-arching priority can divert attention from the equally important goal of preserving value within the business. Ultimately, the goal of any investor in a distressed situation is to realise a suitable return. In the same way as an investor should plan how to preserve value, they should pay equal attention to planning how to realise that value through a post-restructuring exit. The challenge is to retain the discipline to do so whilst implementing a holistic restructuring under the pressure of a potential insolvency.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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