Don't be a stranger

Lots of professional and personal colleagues have heard me and others compare restructuring lawyers to emergency room doctors and our practice to medical treatment. By way of further analogy, emergency rooms see patients in various phases of physical and emotional distress, ranging from calm or concerned, to panicked, to defensive or in denial. (I know I have taken liberties and skipped a few points on the spectrum.) Sometimes, on the defensive-denial end of the scale, when patients think they least need it, doctors can do the most good through early intervention and treatment. My interface with new clients oftentimes mirrors the doctor-patient relationship.

Over the last 10 years, with lenders and capital markets providing endless funding solutions, the majority of our clients arrived on death’s door only after exhausting all other options rendered failure a self-fulfilling prophesy. Just as resuscitating a patient in the emergency room can be difficult (and expensive) when doctors have to use the paddles, professionals working to turn around a business after it has exhausted cash and goodwill with stakeholders find their options narrowed and their runway shortened.

Unfortunately, as restructuring lawyers, we rarely get introduced to clients in that sweet spot of “calm” or “concerned.” However, calamities like COVID-19 and recent economic shocks tend to amplify other emotions: trepidation and fear. Nobody likes these feelings. On the other hand, however, states of heightened anxiety can create more urgency around difficult realities that people – and businesses – would prefer to deprioritize or even ignore in less turbulent times, and therein may lay opportunities.

With proper planning, the current environment may create openings to deleverage bloated balance sheets, and to fix and extract value from broken or outdated business models. As restructuring professionals, we specialize in helping clients identify strategic advantages and creating solutions in moments of crisis to allow them to emerge stronger and better positioned. To optimize the chances of success, my free advice is to not wait until a day of reckoning to call us. Just like many doctors with their patients, we can do the most good before a malady fully manifests itself and does irremediable damage.

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