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Business rescue options available at brink of collapse

The primary objective of the Genesis Global Finance (GGF) Business Rescue Services, is to rehabilitate distressed businesses so that they are able to operate efficiently and meet all their obligations to stakeholders. GGF is registered as judicial managers and administrators and are in the market to provide business rescue services to major stakeholders in distressed companies.

As a Business Rescue Practitioner and Judicial Manager, GGF believes that the overall objective of placing any company under Judicial Management is to resuscitate operations and ensure business survival. In Zimbabwe, at least 90% of the companies placed under Judicial Management have failed to survive, and have either remained under judicial management for extended time periods, or have ended up in final liquidation. This is largely due to the absence of qualified business rescue practitioners and judicial managers with appropriate skills and experience to structure and rescue business operations.

It is our conviction that business rescue practitioners and judicial managers must be appointed primarily on the basis of their experience in business rescue, their proven business acumen, corporate finance and business management skills, with demonstrable capacity to deliver on the following Key Result Areas:

Strategic Planning & Implementation Control;

Mobilisation of appropriately structured Debt and Equity Capital;

Establishment of Internal Control Systems;

Business Development and Brand-Building (Marketing); and

Management of Human Resources & Performance Management.

Our services include: Judicial Management; Business Rescue; Liquidations; Administration of Deceased Estates; Estate Planning; Wills, Trusts & Custodial Services; as well as Independent Business Reviews (IBR) which would in turn include such key activities as:

Independent review of the quality of financial projections and the feasibility of an organisation’s business plan;

Analysis of actual operating cash flows in comparison to their potential variance from projections;

Evaluation of organisations operating in unfamiliar industries or markets;

Structuring of credit terms and conditions that provide a solid risk hedge for banks; and

Evaluation of the compliance of borrowers with the covenants agreed with the bank.

Rationale for independent business reviews (IBR) for banks in Zimbabwe

The ongoing economic crisis has affected the quality of most banks’ loan portfolios. Banks have had to consider alternative ways of enhancing their credit exposures and limit the risk of default.

We believe that banks should make it a requirement for their clients to undergo IBR by an external consultant, and should seriously consider compelling their borrowing clients to undertake and report the outcomes of regular strategic reviews and business planning exercises. IBR has often been regarded as a duplication of the work of the bank’s credit and risk management officers. There is in fact no conflict or duplication between a best practice credit management process and IBR. Quite to the contrary, IBR is an integral part of a solid system. It should serve as an additional resource that banks cannot afford to operate without, and that credit officers should rely upon to support their efforts in minimising the risk of credit default.

Abuse of judicial management?

We are aware that judicial management has in the past been abused by many borrowers for purposes of preventing creditors to undertake legal proceedings against them. This practice has often resulted in banks and other creditors being rendered helpless to intervene for purposes of corporate turnaround, and ultimately prejudiced excessively when those companies fail to recover and wind up in liquidation, under the “shield” of judicial managers who are often limited in their capacity or expertise to undertake meaningful strategic business turnarounds and corporate work-outs. Instead of being victims of judicial management abuse, organisations and banks should pro-actively work with suitably qualified, entrepreneurial and strategy-oriented judicial management practitioners like GGF to influence the application process, and ensure fair and equitable representation of their interests along with other stakeholders, during the implementation.

On the other hand, some banks have had to take matters into their own hands and provide their own business rescue services, as in the successful case of “Lobels”.  However, it is our opinion that banks cannot afford to replicate this kind of recovery initiative for every distressed client on their portfolio as this would imply establishing an entire infrastructure to deal with such cases. Instead, banks have the option to appoint an external consultant to work on a collaborative venture designed to save companies in distress.

Should you as a business or bank require the services of competent consultants to serve as Business Rescue Practitioners, Administrators; Judicial Managers; and/or Liquidators in terms of the law, please contact Genesis Global Finance (GGF) standing ready to dive in and rescue.

 

Source : The Herald

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