{"id":167177,"date":"2019-02-28T13:07:19","date_gmt":"2019-02-28T11:07:19","guid":{"rendered":"https:\/\/eba.com.ua\/?post_type=article&p=167177"},"modified":"2019-02-28T13:10:23","modified_gmt":"2019-02-28T11:10:23","slug":"nexia-dk-independent-business-review-yak-diyevyj-instrument-finansovoyi-restrukturyzatsiyi","status":"publish","type":"post","link":"https:\/\/eba.com.ua\/en\/nexia-dk-independent-business-review-yak-diyevyj-instrument-finansovoyi-restrukturyzatsiyi\/","title":{"rendered":"[:ua]Nexia DK: Independent Business Review \u2013 \u044f\u043a \u0434\u0456\u0454\u0432\u0438\u0439 \u0456\u043d\u0441\u0442\u0440\u0443\u043c\u0435\u043d\u0442 \u0444\u0456\u043d\u0430\u043d\u0441\u043e\u0432\u043e\u0457 \u0440\u0435\u0441\u0442\u0440\u0443\u043a\u0442\u0443\u0440\u0438\u0437\u0430\u0446\u0456\u0457[:en]Nexia DK: Independent Business Review – an efficient tool for financial restructuring[:]"},"content":{"rendered":"

<\/p>\n\t

\n\t\t
\n\t\t\t\t\t\t\t\t\t\t\t\t\t\n\n\t\t\t\t\t\t\t

Yaroslav Nagul MRICS<\/h4>\n\t\t\t\n\t\t\t\t\t\t\tPartner Nexia DK<\/span>\n\t\t\t\t\t<\/div>\n\t<\/div>\n\n

At a time when business faces multiple difficulties, the only way to protect the investment of stakeholders and minimize the risk of bankruptcy is to respond quickly to relevant changes that occur in the company and in the market. Despite the apparency of this statement, it remains an extremely important and often underestimated factor. Especially when businesses suffer from poor financial control, lack of accurate management information, bad relationships and total loss of confidence. However, all these are common issues when a company faces financial trouble.\u00a0 That is why it is important for all stakeholders (including owners, management, lenders, major suppliers and investors) to take timely measures to protect the value of business and minimize the losses for all parties.<\/p>\n

It is very important for lenders to form an argumented opinion about a borrower before deciding to refinance or restructure the existing financial agreements.\u00a0 Such a tool could be offered by the Independent Business Review (IBR) which aims to create a single information platform between lenders and borrowers and acts as a catalyst for debt restructuring decisions. The main objective of the IBR is to provide an objective and independent analysis of the debtor’s financial and economic activity to identify the real causes of financial difficulties and to find adequate measures to restore the effective activity of the debtor.<\/p>\n

Advantages for creditors and debtors are obvious: the first keep the solvent debtor avoiding the liquidation of their property, increase the level of debt repayment, and the latter are given a chance to resume their business activity by reducing the financial burden, improving liquidity, obtaining new financing, or receiving a moratorium or a stand-still for the fulfillment of obligations.<\/p>\n

Among other things, IBR also offers<\/strong>:<\/p>\n

    \n
  • provides an idea of the risk and impact of any proposed agreement for lenders;<\/li>\n
  • improves understanding of the reliability and reach of the borrower’s business plan and assesses new monetary requirements;<\/li>\n
  • allows lenders to evaluate their options and plan potential enforcement;<\/li>\n
  • maximizes the chances of an agreement between all lenders.<\/li>\n<\/ul>\n

    Usually IBR covers the following sections<\/strong>:<\/p>\n

      \n
    • Review of the debtor\u2019s characteristics of activity and their management system;<\/li>\n
    • analysis of historical and current financial statements;<\/li>\n
    • market analysis;<\/li>\n
    • analysis of operational and financial forecasts of the debtor’s activity and restructuring plan;<\/li>\n
    • legal audit of the debtor and certain aspects of their activity;<\/li>\n
    • review of the state of the debtor’s mortgage;<\/li>\n
    • conclusion on the promising business activity of the debtor, key risks and conditions of such prospects;<\/li>\n
    • conclusions on the probability of positive impact of the restructuring plan on the restoration of the debtor’s business in case of its implementation;<\/li>\n
    • recommendations based on the work done and objectives of the task.<\/li>\n<\/ul>\n

      Depending on the case and the decision of the lenders involved, an independent expert performing an IBR task may be a natural or legal person who must have an impeccable business reputation, be independent and impartial in their judgments, is not a related person and not have a conflict of interest with the debtor and their lenders. This person should also have the following practices (and\/or): in the field of law, audit, assessment and business modeling, consulting, marketing research, etc.<\/p>\n

      The procedures for financial restructuring contribute to progressive innovations in the business environment of Ukraine, in particular: implementation of the practice of conducting an independent professional analysis of the debtor’s business and the prospects of their activity; increasing the transparency of the business environment; application of the best practices of negotiations and cooperation between lenders; popularizing the arbitration institute as an alternative to economic courts.<\/p>\n

      In the developed countries, IBR services are provided by leading international auditing and consulting companies in a variety of cases, for example, if<\/strong>:<\/p>\n

        \n
      • bank limits are regularly exceeded;<\/li>\n
      • own sources of financing are exhausted;<\/li>\n
      • terms of lending from suppliers are violated;<\/li>\n
      • unable to compile key accounting and trading information when necessary;<\/li>\n
      • if necessary, an independent assessment of the quality of financial forecasts of borrowers and their business plans;<\/li>\n
      • there is a concern that borrowers can assume excessive risks, so that their actual operating cash flows can significantly deviate from forecasts and not be sufficient for timely repayment and debt servicing;<\/li>\n
      • there are difficulties in assessing the risk of default by a borrower who works in an unfamiliar sector;<\/li>\n
      • possible breach of a loan agreement;<\/li>\n
      • available complex trade or monetary restrictions;<\/li>\n
      • additional investment plans or exits from business are considered;<\/li>\n
      • the level and conditions of future lending support should be agreed.<\/li>\n<\/ul>\n

        But at the same time, it is always a prerequisite for the company to be fundamentally viable, and owners and management to be open to taking the necessary measures to save money and optimize their activities.<\/p>\n

        In Ukrainian practice, the impetus for the active development of such services was the entry into effect on 19 October 2016 of Law of Ukraine No. 1414-VIII dated 14 June\u00a0 2016 “On Financial Restructuring” which defined the conditions and procedures for conducting a voluntary financial restructuring procedure, and despite the fact that it will expire on 19 October\u00a0 2019, I will assume this will be a positive trend for a wider application of the mechanisms of voluntary financial restructuring in our country, and will contribute to the improvement of the Ukrainian economy.<\/p>\n

        <\/p>","protected":false},"excerpt":{"rendered":"

        At a time when business faces multiple difficulties, the only way to protect the investment of stakeholders and minimize the risk of bankruptcy is to respond quickly to relevant changes that occur in the company and in the market. Despite the apparency of this statement, it remains an extremely important and often underestimated factor. Especially […]<\/p>\n","protected":false},"author":4489,"featured_media":167178,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false},"categories":[24,23],"tags":[],"yoast_head":"\nNexia DK: Independent Business Review - an efficient tool for financial restructuring - European Business Association<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/eba.com.ua\/nexia-dk-independent-business-review-yak-diyevyj-instrument-finansovoyi-restrukturyzatsiyi\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Nexia DK: Independent Business Review - an efficient tool for financial restructuring - European Business Association\" \/>\n<meta property=\"og:description\" content=\"At a time when business faces multiple difficulties, the only way to protect the investment of stakeholders and minimize the risk of bankruptcy is to respond quickly to relevant changes that occur in the company and in the market. 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