Advisory Services

Distressed Debt

Bankruptcy, Receiverships & Article 9 Sales

Interim C-Suite Management

Corporate Recovery & Crisis Management

Refinancing, Asset & Business Sales, Mergers & Acquisitions

Financial & Operational Due Diligence and Re-engineering

 

DISTRESSED DEBT

 

CIRCUMSTANCES

An over-leveraged balance sheet is often the product of a faltering company, an ill-conceived business plan, or a poorly deployed acquisition vehicle. Regardless, it always serves as an anchor preventing any positive movement by the company who holds it. Moreover, reconstituting the balance sheet into something that more appropriately reflects the operation from which it must be serviced, is a difficult undertaking. It can be even further complicated by a waterfall of lien holders or a syndication of lenders with differing goals. The solution can sometimes be found by improving profitability to a point where the company can handle the debt. However, it more often requires a complex solution involving creative financial re-engineering and comprehensive negotiations.

WHY CRATOS?

Cratos Advisors has significant experience working with all levels of financing including: first lien cash flow, term and asset-based secured debt, second lien debt, mezzanine debt, warrants and preferred stock, bridge and interim financing, and sale leasebacks. We maintain a network of debt providers that can be called on when a refinancing or capital raise is necessary. We also know how these various debt instruments are structured, amortized, priced and managed from the lenders’ perspective. This insight and experience allows us to identify and recommend workable solutions for corporate borrowers and lenders alike.

 

BANKRUPTCY, RECEIVERSHIPS & ARTICLE 9 SALES

 

CIRCUMSTANCES

While reorganizations can often be conducted without the employ of legal relief, it is sometimes necessary to utilize various tools within commercial law to ensure stakeholders are properly protected and minimize potential risks for debtors and creditors alike. These tools most commonly include Chapter 11 & 7 Bankruptcy, Uniform Commercial Code Article 9 sales or foreclosure, Assignments for the Benefit of Creditors, and Court appointed receiverships. Each tool presents advantages and disadvantages with various speeds to resolution, the potential for ongoing liabilities, and sometimes most importantly, wide ranging costs. Whether you are a debtor facing a voluntary or involuntary bankruptcy filing or a creditor seeking to foreclose on a non-performing debt, having a seasoned advisor that understands both the process as well as the business can save invaluable time and money.

WHY CRATOS?

Every Cratos professional has experience representing debtor-in-possession operating companies, secured lenders, and unsecured creditor committees. We often assume leadership as opposed to advisory roles, serving as Chief Restructuring Officers or Court-Appointed Receivers in federal and state courts. We can speak the language whether communicating with senior management, a company’s vendors, board of directors, special asset lenders, U.S. Trustees or judges. Most importantly, since each of these constituents will have advisors of their own, you need to be well represented by a firm able to defend your position. Our professionals have been involved in court districts across the U.S. including Delaware, New York, California, Maine and Ohio and are well known by many of the leading law firms. We are experienced in dealing with pre-petition planning, DIP financing, cash flow budgeting and monitoring, 363 and liquidation sales, preference analysis and litigation support.

 

Changing Control of Assets Using  Article 9 Tool

 

INTERIM C-SUITE MANAGEMENT

 

CIRCUMSTANCES

Often businesses find themselves with a leadership team or a key member of executive management that does not have the skill set to further the company’s progress or take corrective actions. This becomes more common for private equity investments after transactions are closed and the pressures to deliver quick results are expected. Finding a suitable replacement can take time and is often difficult. In those circumstances, it is critical to have a firm with trusted professionals who can step in on an interim basis and take the appropriate level of control to keep a business on track. The interim manager, then having day-to-day knowledge of the business, can also be essential in vetting its own replacement. Interim managers bring a fresh perspective and years of experience that is invaluable to any situation.

WHY CRATOS?

Each Cratos professional has advised clients in an interim board and executive officer capacity either as Executive Chairman, Chief Executive, Chief Restructuring Officer, Chief Financial Officer, or Chief Operating Officer. We bring years of invaluable experience and perspective and have consistently worked directly with boards of directors, other executives, and equity investors to create and implement value-enhancing solutions. Whether you’re facing a distressed or sustainable situation, our professionals are prepared to address challenging business problems utilizing a fact based, analytical approach. We have extensive industry backgrounds and credentials including Certified Turnaround Professional certifications. The positive results we consistently deliver on our prior engagements prove our ability to re-engineer the fundamental manner in which our clients operate in order to create sustainable profitability.

 

CORPORATE RECOVERY AND CRISIS MANAGEMENT

 

CIRCUMSTANCES

Accomplished business executives and investors may have had experience leading companies to success in the past. However, that does not necessarily translate to the same during a crisis. Efficiently dealing with issues such as a severe liquidity shortfall, failed ERP conversion, the loss of major customer, or a contentious banking relationship, to name a few, requires a special skill set. More often than not there are multiple elements of a crisis that must be dealt with simultaneously. A plan to deal with the crisis must be constructed and a contingency plan prepared if the former is not successful. It requires attention to detail and excellent communication with no room for ambiguity or lack of decision making. Engaging a firm that has both the experience and track record to handle these situations can bring stability to a volatile situation. The key to surviving many of these situations is making the call for help as soon as possible.

WHY CRATOS?

The Cratos Advisors team includes seasoned crisis managers. Whether serving in an interim management capacity or in an advisory role, our professionals have regularly dealt with complex situations and are known for their ability to be quick studies. As an unbiased outside party, we are capable of making difficult and quick decisions. Cratos has an excellent track record of leading distressed companies back to success.

 

REFINANCING, ASSET & BUSINESS SALES, MERGERS & ACQUISITIONS

 

CIRCUMSTANCES

There are certain scenarios that require a unique skill set that only comes from experience. These situations require a deep understanding of business strategy, the impact of legal transactions on that strategy, and the ability to translate those transactions into workable legal documents. More specifically, these transactions often include business refinancing, asset or operating unit sales and mergers and acquisitions. Each of these scenarios, if not well thought out and without proper due diligence and accurate documentation, can wreak havoc on an operation post-closing. Successful execution requires significant forethought, extensive internal team work, and access to additional service providers whether cash flow or asset-based lenders, second lien lenders, leasing and equipment finance providers, investment bankers, liquidation/auction companies, IT professionals and attorneys.

WHY CRATOS?

Whether you’re in a distressed situation requiring a lower tier or second lien lender or on the road to recovery and looking to refinance into a more traditional financing arrangement, Cratos has extensive experience sourcing new capital and maintains a network of lenders capable of delivering those needs. Similarly, an operational restructuring, whether distressed or not, often requires the sale of assets including entire businesses or business units to either create capital or deliver an acceptable exit strategy. Our professionals have advised on hundreds of these transactions and are capable of maximizing transaction value through seasoned contract negotiations and sourcing appropriate buyers. Lastly, maximizing value often also requires a merger or acquisition of similar operations that fit into the existing core business. Identifying these opportunities, measuring their risk and executing their integration are frequent objectives that we execute very well.

 

FINANCIAL & OPERATIONAL DUE DILIGENCE AND RE-ENGINEERING

 

CIRCUMSTANCES

Operating companies are always in a position to improve and a fresh set of eyes that brings experience from within as well as across industries can provide welcome insight. Owners and senior leaders of both distressed and performing companies should always seek continuous improvement to drive efficiency and maximize value. This may be accomplished through changes in product offerings, standard costing, pricing strategy, sourcing, distribution channels, warehousing, manufacturing resource planning, overhead structure or working capital management to name a few. Often new policies and procedures need to be developed, drafted and implemented. In many cases management needs to be evaluated, moved or changed. Accurately capturing and reporting information (whether accomplished manually or through information technology) is essential to driving these changes. As investors seek to deploy capital it is also crucial for proper due diligence to uncover the true potential or the dangers of the target investment. Cratos’ seasoned advisors have the experience to immediately recognize opportunity, alleviate risk, create solutions and implement change.

WHY CRATOS?

Cratos professionals arrive on site with a toolkit of experience and a direct, “no-nonsense” approach. We have not only been trained to identify problems and opportunities but also quickly suggest and more importantly implement solutions. Our breadth of capabilities and hands-on approach allows us to build and run detailed scenario modeling and analysis alongside company staff accountants while also conducting strategic planning sessions with chief executives and board members. We often solve problems by engaging workers on the shop floor while also negotiating a new financing arrangement with outside lenders. Each engagement starts with an agreed upon work plan and timeline. All steps are clearly communicated with a client leadership team along the way. Goals are set and results are measured. In the end, Cratos is not successful unless our clients are successful.