Financial Controller for several divisions/subsidiaries of an international, publicly-traded, Australian-based construction services company.

Fresh out of Law School and Business School I went to work for the Aquila construction industry division of what is today the largest natural resource company in the world, BHP/Billiton. We had construction and construction services subsidiaries in Asia, Australia and North America, many of which were under performing. I became, more through accident than intent, the group’s turnaround controller.

For several years I traveled from subsidiary to subsidiary developing and implementing financial reporting systems working closely with the division CFO so that everyone filed comprehensive monthly financial reporting packages with the Australian head office.

I learned the discipline of compiling financial reporting packages to strict monthly deadlines regardless of the country, the culture or the type of business. I learned how to tailor financial management reporting packages to the exigencies of each individual business so that they provided useful operational performance information while complying with the statutory requirements of both the local jurisdiction and the Australian accounting standards.

I was fortunate to have bosses who were highly skilled and patient and nurturing.

Debtor side turnaround – My preferred role is to be hired to turn the company around at the nadir of the crisis and then to shepherd the company through an out-of-court creditors moratorium and ultimately return the company to profitability.

This isn’t a job for the faint of heart because it involves immediately stemming the hemorrhaging cash, instituting a good daily cash management system and quickly negotiating additional financing to create enough time to address the underlying issues that have eroded profitability.

Once the additional financing is in place (often it is a hard asset or Receivable facility or a facility supported by some outside collateral) you have to transition to tackling the operational issues to return the company to profitability. This can be intellectually challenging and invariably involves developing and implementing financial management reporting systems to, among other things, monitor the efficacy of the turnaround initiatives.

The skillset to successfully negotiate this stage of the turnaround is entirely different from that required at the early/crisis stage. Here you have to foster collaborative relationships with the sales, operational and production folks in order to develop sound strategies to move the company forward and back into profitability, all the while retaining the confidence of the moratorium creditors if you are in an out-of-court situation.

Creditor side consulting – I’ve been chair of various creditor committees both in Chapter 11 situations and in out-of-court situations. I’ve been the court appointed consultant in Chapter situations.

I’ve provided expert witness testimony, and been retained by the senior bank lender (usually a commercial bank) to advise the bank on next steps/viability analysis e.g. do they stay the course and provide additional financing, or do they foreclose?

Out-of-court Workouts under auspices of CMA Moratorium – By the time under-performing companies recognize the depth of their problem it is often too late and too expensive to file and conduct a Chapter proceeding. A way to avoid the expense of a Chapter filing and the cumbersome slow-moving nature of Chapter, is to do an out-of-court workout under the auspices of the CMA.

The way this works is that a creditor moratorium is declared by the Trustee/CMA. The CMA receives a UCC security interest over all the moratorium debt, and the company with the moratorium in place now has a certain amount of breathing room to identify, address and rectify the issues that caused it to fall into default in the first place.

Because it is ‘out-of-court’ the creditors’ forbearance under the moratorium is consensual (rather than imposed as it is in Chapter); thus the credibility of the turnaround specialist is critical to this process being successful. I developed an expertise at organizing and executing these kinds of out-of-court workouts, and enjoyed considerable success in relation to many of them.

Anatomy of a turnaround – a solvency crisis of one type or another causes the bank/senior debt to declare a default, which gets resolved by the company agreeing to hire a turnaround specialist (me) who comes in and immediately negotiates additional financing to create runway so that the underlying operational issues can be identified, addressed and rectified.

In the crisis/early stage of the turnaround (the darkest period) an austerity program of some kind is quickly instituted and daily cash management is king. Once the refinancing package is in place, the underlying causes of the solvency crisis are identified and addressed.

The causes run the gamut from situations where the company hasn’t kept up with evolving industry technology or technological advances have obsoleted the industry, to (more commonly) situations where the company principals have failed or ignored their stewardship responsibilities in one form or another.

E.g. in one company in which I was installed as the turnaround specialist by the senior bank lender, the company principals (the sons of the original founder had developed profligate lifestyles) had burned their manufacturing facility to the ground, absconded with the insurance proceeds, stolen their employees’ pension funds, and quickly fell into default with all their lenders.

This type of situation, although dramatic, is more common than one might imagine.

I’ve done quite a lot of capital formation and capital structuring work, primarily for startups but also increasingly for established companies that have gained a commercial foothold but raised most of their capital without regard to the securities laws.

They often have a need for additional expansion capital and have exhausted their friends & family capital sources, necessitating them to approach more sophisticated investors. Before they can access more sophisticated capital – they usually want to raise capital using the Reg. D safe harbor exemption to registration –  their existing capital structure has to be revised and they have to be brought into compliance with the securities laws.

I assist them in working through this process, thus readying them for more professional capital. As part of this I’ve become a ‘one-stop PPM shop’, penning business plans, assembling multi-year financial projection models, negotiating the terms of the Series A Share Purchase Agreement and then writing the Agreement itself, generating the pitch decks, cap tables, and due diligence documents.