ARE’s main objective is to help companies in difficulty to survive, to restructure, and to turn around. It does this by mobilising both its own organisation and those of its members.
The French financial restructuring sector is currently undergoing the biggest changes it has seen in the last thirty years. Traditionally, debt renegotiation has been governed by a set of well-tried rules and procedures. It brought together the company’s bankers, consultants where appropriate, and - in some cases - the tax and social authorities.
However, under pressure from international investors the financial framework which led to this balance is being considerably modified, creating a real debt « market ». As a result, the behaviour of the parties to such negotiations is changing, and the following trends are emerging : - the traditional banking sector is becoming more exacting and banks’ support – even if they already have commercial relationship with the company - can longer be taken for granted ; - these same banks have grown accustomed to flexibility when looking at risk and its value on the debt market ; - negotiations take place nowadays in the presence of new parties, mainly Anglo-Saxon ; - these new parties bring to the table their own methods and objectives, and the diversity of these makes it harder to reach a consensus. - the interlocutors may change during the course of the negotiation, again making it hard to reach agreement ;
From now on, refinancing conditions will be the subject of a difficult negotiation, in some cases of an unusual toughness, and the solutions arrived at will be radically different from those that we are used to. Indeed, the result may well involve the company coming under the control of much more active creditors. And yet, in this evolving context, creditors, whether traditional or new, will continue to adopt a pragmatic approach : it is still the case that well-negotiated solutions lead to healthy balance sheet restructuring. So let us avoid an over-simplistic approach, In fact these developments may offer a real opportunity for the company, as pragmatism and flexibility in the search of a solution is a necessary condition of refinancing. We are being forced to reassess our way of working and our assumptions. We are being forced to take a fresh approach to negotiation. Finally we are being forced to modify and - communicate about - the rules known as “market rules” so as to find a lasting solution.
In reality, the relationship between companies and their creditors needs to be revised if we are to avoid proving the pessimists and doomsayers right. This is the price we need to pay in order to fulfil our professional role, enabling our customers to find long-term solutions that form part of a clearly understandable, well-organised, and transparent framework
This is the challenge faced by ARE and its members over the coming year !
ARE’s main objective is to help companies in difficulty to survive, to restructure, and to turn around. It does this by mobilising both its own organisation and those of its members.