Montreal, Quebec--(Newsfile Corp. - April 14, 2015) - Banks and private lenders have a new means of recovering value from companies in distress thanks to a new approach to corporate restructuring offered by a team of Montreal consultants.
Newhouse Restructure is the restructuring off-shoot of Newhouse Strategic Counsel, a fifteen-year-old business law practice. A couple of months ago, Newhouse Strategic Counsel founder and business lawyer, John Mavridis, teamed up with entrepreneur and financier, Michael Judson, to offer an alternate approach to restructuring companies in financial distress.
Normally when a company enters into a restructuring mode it is done under the auspices of a court from which it has sought protection from the claims of creditors. In return for providing the company time to reorganize its affairs, the court also appoints a trustee, typically an accounting firm, to monitor and supervise a company as it embarks down the challenging road of renegotiating the terms of its loans from lenders and its debts to its suppliers. This is known as formal restructuring.
Frequently, by the time a debt-laden company enters into a formal restructuring mode, management is unable to see a way out of its troubles and becomes inclined to believe that a bankruptcy is the only possible outcome.
"Bankruptcy is the last option," says Michael Judson. "In that scenario a significant amount of value is lost. Assets get auctioned at pennies on the dollar and common shareholders are wiped out."
"Too much value is destroyed in a bankruptcy," said Judson. "Our plan is to get involved with lenders and management before circumstances get anywhere near that cliff."
Judson says Newhouse's strategy is to be engaged by the lender the minute the lender smells trouble. The lender may not have a 'legal right' to impose its view or will upon a borrower/client but it has the "moral right", he said.
What happens then? "We help make the tough phone calls," said Judson. "You need a plan and then you need to get on the telephone and tell everyone about it."
Newhouse says its principals have a unique combination of skill sets to be able turn around companies in financial distress. It has the business law expertise and formal restructuring experience but as well, vital experience as entrepreneurs/company-builders, marketing consultants and financiers.
Judson and Mavridis have been through their share of challenging situations. The two partners were involved in restructuring $80 million debt of a TSX-listed company.
"There are typically two endings to these kinds of stories. One is curtains and the other is where creditors convert their debt into equity in the company," said Judson. " We were able to convince the bondholders to take stock and drive on."
For More Information Please Contact:
Michael Judson at 514-865-5496
