Alternative Workouts Part 3: The Other Roles Workout Experts Play
Among the many alternative paths forward for business entities in distress, workout professionals serve a number of roles. This may be in the form of overseeing an Assignment for the Benefit of Creditors (ABC), serving as a Bankruptcy Trustee, or as a court-appointed Receiver, to name a few. But there are many more.
In parts 1 and 2 of this series, Douglas Wilson Companies detailed two areas of workouts: ABCs and operating company liquidation, with examples and case studies from 36-plus years of experience providing specialized services for workout scenarios.
In Part 1, we introduced the Assignment for the Benefit of Creditors, commonly known as an “ABC,” which was the method for winding down national online retailer Zulily.
In Part 2, we detailed two cases of operating company liquidation: one being a 125-year family-owned specialty lumber business and the other a national manufacturer of furniture supplying the hospitality industry.
Part 3 of this series takes a look at some of the other roles workout professionals serve to offer a path forward that is most often less costly than traditional bankruptcy.
Problem resolution, whether it is related to financial distress, a partnership dispute, an operating challenge or some other cause, often requires a combination of skills: management expertise, finance and accounting experience, or operations, for example.
Like bankruptcy, receivership is a well-known remedy. Yet there are countless specific roles that should be considered as well, depending on the scenario.
Among the many alternative remedies available, entities in distress may seek expertise from a:
- Chief Restructuring Officer (CRO)
- Bankruptcy Liquidating Agent
- Financial Advisor In Bankruptcy
- Special Master
- … or any any number of other fiduciary roles that assist in workout scenarios.
Over the last three and a half decades, DWC’s leadership and team have served in these roles and many more. These are a few of the recent assignments for which we’ve utilized our experience in alternative workouts.
Accountant for the Trustee
Assignment type: Bankruptcy Trustee
In the matter of the bankruptcy of Xelan, a provider of investment and insurance products to a network of physicians, DWC served in the designation of Accountant for the Trustee; a role that involves providing accounting services for the assigned Trustee.
The role involved an analysis of all revenues and expenses across all Xelan entities since the company’s bankruptcy, including reconciling and separating commingled accounts as necessary. These accounts were often commingled between the estate and the business operator, acting under a Business Asset Preservation Agreement.
“From managing cash receipt deposits to financial reporting to the Trustee, DWC also continued in its role by assisting the Trustee during the sale of Xelan,” says DWC Chairman and CEO Douglas Wilson. “With two CPAs on our team, the expertise we bring based on 36 years of experience in workouts of all kinds positions us to assist with accounting specifically and problem resolution generally.”
Forensic Accountant
Assignment type: Family estate
In addition to companies experiencing distress, families facing a disagreement may seek the expertise of an independent third party, as well.
This was the case in a recent dispute among the beneficiaries of a private family trust. Acting as forensic accountant, DWC’s team, which includes an experienced forensic CPA, reviewed and analyzed all accounting transactions among the trust’s legal entities spanning a three-year timeframe. The forensic accounting team provided documentation, authorization and reporting for all transactions, enabling the beneficiaries to access all of the account information in question.
“We often think of companies and lenders with commercial assets as the primary groups facing these kinds of needs,” says DWC President Michele Vives. “But families, family trusts, private family offices and others can benefit strongly from an independent resource like DWC when they face problems in need of resolution.”
Special Master
Assignment type: Family business partnership
A jointly-owned entity spanning the largest industrial business park in the United States recently encountered a dispute among its father-son ownership. The dispute centered around the management of the business park.
As agent for Special Master in the case, DWC provided forensic accounting services including the review of all cash, real estate and partnership transactions for 10 separate legal entities across the company. The review spanned 11 years, more than 2,000 financial transactions and more than 200 real estate deals. DWC was able to resolve the dispute, and also made recommendations for the company going forward.
“Not only did the Special Master role work toward the problem resolution, it also allowed the ownership the opportunity to review and analyze the business constructively,” Wilson says. “Any ownership group or company facing a problem scenario should really explore the types of expertise available to them. With a robust team of problem-solvers having served these roles in more than 1,200 matters, DWC can offer both traditional and non-traditional fiduciary services depending on the specific needs of the situation.”
