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September 2004


Vol. 2 No. 8
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ABF Journal, September 2004
September 2004

The Keystone of Effective Turnarounds

In an “Anything Goes” World, Is Bankruptcy a “De-lovely” Alternative?
By Richard W. Wirth

It seems that at any given time, many Fortune 500 companies are entering into, restructuring under or emerging from some form of bankruptcy protection. Even so, there are those business owners and boards of directors who still view the topic as taboo, shrouded in a fog of stigma and fear. Unfortunately, these are the very same companies that could, in troubled times and under special circumstances, benefit most from this option. (Ref # BANK009)

Navigating the Complex World of Accounting Restatements
By Randall S. Eisenberg and Jennifer L. Polli

Nothing induces a cold sweat for a company’s lenders faster than the announcement of the detection of an accounting error and the need to restate previous financial results. Even though every accounting investigation and restatement is unique, there is a general framework that borrowers and lenders can follow to avoid the worst outcome of all – an otherwise avoidable business failure that isn’t avoided.
(Ref # ACC004)

Lessons for Healthy Companies From the Turnaround Trenches
By Peter Fitzsimmons

Many executives who looked so capable during the good times now face a challenge they have never seen before or been trained to handle – building profitable businesses in an adverse environment. Therefore, today’s managers would be wise to think like turnaround professionals because the gap between a healthy and an underperforming company is very narrow. (Ref # TM027)

Have No Fear… A Borrower’s Bankruptcy Is Not the End of the World Part II – Effects & Appropriate Actions
By Trent L. Rosenthal

With proper planning from the inception of the relationship and appropriate vigilance, an asset-based lender need not fear a borrower’s bankruptcy. Rather than viewing it as the end of the world, the lender should instead concentrate on obtaining the benefits that bankruptcy might offer. (Ref # BANK010)

Successor Employer Issues:

Unions Emerge as Key Stakeholders in Canadian Restructurings
By Kevin Morley and Orestes Pasparakis

In Canada, the landscape for loan restructuring has been altered by an increased and more aggressive activism in the bankruptcy process by labor unions clearly dissatisfied with their historical treatment in Canadian insolvencies.
(Ref # xxxxxx)

Due Diligence:

Putting Information to Work in the Turnaround Process
By William F. Loftus and James E. Rogers

A turnaround presents its own profile of risks and opportunities that must be clearly defined, analyzed and understood and is not suitable for all situations or to all investors or lenders. Deciding whether to undertake a turnaround requires a robust decision process, and a poor decision can make an already difficult situation even worse. (Ref # TM028)

Orchestrating a Successful Turnaround – Smart Communications Help Maximize Value
By Leonard H. York

Troubled companies have troubled communications, and a head-in-the-sand approach gets companies into trouble. Using smart communications as a tool can help restore and maximize a troubled company’s value. (Ref # TM029)

Columns

PROFILE: EXECUTIVES
A Profile of Success: ABL Industry Veteran Creates Marquette Business Credit
A Profile of James E. Casper, President and CEO of Marquette Business Credit, Inc.

Jim Casper has been involved in asset-based lending for a long time and in his 30 years in the industry, he’s seen the likes of a start-up manufacturing company use its initial loan to grow into a huge, publicly held firm. Recently, Casper began playing the game on a whole new playing field – one of his own making – with the launch of Marquette Business Credit. (Ref # EXEC020)

LEGAL EYES
Using Health Care Receivables as Collateral… Expect Some Twists & Turns
By Matthew E. Franks

Secured financing based on a health care provider’s receivables, although becoming arguably easier, presents a number of special challenges. The substantial regulation of the health care industry creates unique risks both with respect to the collateral value and to the financial stability of the provider itself. Lenders are advised to pay close attention to current case law and legislation surrounding these issues.
(Ref # LGL036)

ANATOMY
Bank of America Business Capital & Bumble Bee

How a Flexible ABL Structure Can Fit the Bill
By Jim Connolly

Asset-based loans historically have been used in restructurings and turnarounds, but increasingly companies with strong financial performance are choosing asset-based loans to fuel their growth strategies and Bank of America Business Capital’s $125 million revolver to Bumble Bee Holdings is a current case in point. (Ref # DLS013)

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