When repayments slip and lender conversations become difficult, the temptation is to look for a quick fix. The more useful first step is a sober assessment of what kind of stress this is, because the answer decides which options are realistic.
Temporary or structural?
Temporary stress comes from a delayed receivable, a one-off cost overrun or a short demand dip. Structural stress comes from a business model that cannot service its debt even in normal conditions. The first can be bridged with restructuring; the second needs a more fundamental solution.
Cash flow and viability
A rebuilt cash flow projection, with realistic assumptions, shows what debt the business can sustainably carry. Where operations are in question, a techno-economic viability study provides an independent view of whether and on what terms the business can continue.
Stakeholder map
Understanding each lender's position, security, exposure and likely stance is essential. A proposal that suits the largest lender but ignores the others rarely survives.
Realistic structures
- Restructuring of repayment terms where the business is fundamentally viable.
- A one-time settlement where the business or the asset can support a defined payout.
- A resolution plan where a formal process applies and a resolution applicant is involved.
Credibility matters
Whichever route is chosen, lenders respond to credible numbers, transparent information and consistent communication. Advisory support helps organise all three. It does not replace legal counsel, who should guide strategy and representation.
This article is for general information and is not financial, legal or tax advice. See our disclaimer.