Recapitalizations of BusinessesIn the past year, our legal and tax services with respect to recapitalizations of businesses have increased. We have not only been mandated by businesses at risk but also by banks that grant credit.
This form of mandate requires us to examine whether the business entity is overindebted and, if necessary, such existing overindebtedness can be overcome.
As a next step, we develop concepts - in close consultation with the management and/or the owners of the business - on how to find new chances of profit and how to separate those parts of an entity that operate at a loss, preferably on a cost saving basis.
The best way to achieve such a divestiture of those parts that operate at a loss is to search for an investor who aims at synergies and cost savings because of an already established presence in the same market segment.
If concepts can be created that lead to a chance of survival for the business, the next step is to secure the future financing of the corporate activities by way of negotiations with banks and also venture capitalists.
With respect to heavily over-indebted businesses, there is every so often only the possibility to safeguard a (partial) continuation by commencing insolvency proceedings. In doing so, the possibility of self-management (debtor in possession), newly introduced by the insolvency law reform, is frequently made use of.