Deloitte Turnaround and Restructuring (T&R) Newsletter

The Deloitte T&R group was contacted regarding a client in the consumer durable home goods sector to propose audit and tax services. After much consultation and formal discussions, our audit team was selected by such client to be its go-forward auditor, demonstrating Deloitte's ability to provide the necessary professional services called for by our clients.

The Deloitte T&R group was contacted regarding a client in the consumer durable home goods sector to propose audit and tax services. After much consultation and formal discussions, our audit team was selected by such client to be its go-forward auditor, demonstrating Deloitte's ability to provide the necessary professional services called for by our clients.

Deloitte Turnaround & Restructuring (T&R) is providing technical accounting, valuation, and ASC 852/bankruptcy accounting services to a blockchain infrastructure, hosting provider, and digital mining company. Additionally, Deloitte Advisory is teaming up with Deloitte Tax LLP to assist the company with its overall tax restructuring efforts and its ASC 740 reporting requirements.

Deloitte & Touche LLP's audit team engaged Deloitte Turnaround & Restructuring (T&R) specialists support for the client's 2022 annual audit, to conduct review of financial projections and develop performance sensitivities to understand the various liquidity impacts and the company's ability to operate as a going concern.

Deloitte T&R assisted a member firm of Deloitte Touche Tohmatsu Limited on an engagement, for a multi-national manufacturing company, to help client develop a plan for the potential closure of a US-based manufacturing plant. The scope of the project included stakeholder communications, employee retention, wind-down scenario planning, and union negotiation strategy.

Deloitte T&R was hired by the US parent company of a large engineering, procurement, and construction company to assist with a Managed Exit effort as the global parent shrinks its footprint. Our efforts included liquidity modeling, stakeholder negotiations, and overall strategic advice in winding up operations in North America. The effort was successfully achieved with all projects being completed and all stakeholders dealt with in a mutually satisfactory manner.

Deloitte T&R provided bankruptcy accounting, reporting, tax, and project management support for the implementation of fresh start accounting for a global financial and retail technology company.

Deloitte T&R assisted a potential buyer of a carpet manufacturer operating under Chapter 11 with a 363 sale of the business. Deloitte T&R assessed management's turnaround strategy which included significant plant consolidation and equipment redeployment, and the prospective financial modeling projections. Management incorporated Deloitte's recommendations in its updated consolidation strategy and financial projections leading to a proposal to buy the company, including the support to secure proposed financing.

Deloitte T&R provided bankruptcy accounting and valuation services for a $525 million provider of well site services in the United States to oil and natural gas drilling and producing companies.

A specialty retailer with more than 600 stores and $800 million in sales engaged Deloitte T&R to support its emergence accounting effort. Deloitte T&R, working closely with Deloitte Tax LLP, is advising the company on various complex tax, industry, and technical accounting items related to its Chapter 11 emergence.

Deloitte provided bankruptcy accounting, financial accounting and reporting, valuation, tax, process and systems services to a large retailer with a significant number of North American locations. Our efforts were key in assisting the company to sell off the majority of its assets and operations as well as spin off a large portion of its real estate into a new Securities Exchange Commission-registered reporting entity.

Deloitte T&R recently advised a mid-market medical beauty and aesthetics company experiencing over 20% annual top-line growth. We identified $30 million in cash release from its receivables, representing 15% of its current receivables balance. To achieve this, we launched a 'Dash for Cash' collection improvement initiative, aimed at upskilling their global collections team, and enhancing both upstream and downstream processes, including statements of accounts and electronic payment portal capabilities. Additionally, Deloitte T&R assisted the client in identifying a path to reduce their inventory by approximately $15 million, or 10% of their current balance. The company's executives have expressed that these efforts can help fund market expansion and help sustain their current growth trajectory.

A global oil and gas company sought Deloitte T&R’s advice and recommendations to improve and expand its working capital programs amid an enterprise-wide SAP S/4 HANA transformation. We identified payables cash improvements totaling approximately 20 days of procured spend terms improvement, enabling $2 billion in cash generation through supply chain financing capabilities. Furthermore, we identified a $45 million annual profit and loss (P&L) benefit to be realized through dynamic invoice discounting capabilities. This program is also viewed as a positive element of their vendor relationship management program.

Deloitte T&R recently commenced a project with a consumer and industrial service business to assist with the integration of a newly acquired company. The acquired company’s processes lacked maturity and required comprehensive integration. Our work includes an end-to-end analysis of the order-to-cash function and the design and implementation of a future-state integrated finance organization. These efforts can help the company increase cash flow and achieve significant annual cost savings.

German auto supplier engaged Deloitte T&R to conduct an assessment of its US division's cash forecasting tools and cash conversion processes in connection with a global restructuring effort.

A private equity-owned developer and manufacturer of aesthetic medical equipment and systems engaged Deloitte Turnaround & Restructuring (Deloitte T&R) to assist with its working capital improvement and cash flow management processes. As part of Deloitte T&R's value creation services, Deloitte T&R assisted the executive finance leadership team in the enhancement of its cash conversion by identifying and implementing process improvement initiatives to accelerate its customer collections. Additionally, Deloitte T&R developed a disbursement forecasting tool to help the client manage liquidity by projecting its vendor payments based on current and projected order volumes.

Deloitte Cash & Working Capital Services advised a multigenerational family-owned business, on identifying strategic working capital, cash, and treasury management efficiencies. The company specializes in tree pruning and vegetation management for utilities and government agencies.

Deloitte T&R is currently engaged to provide strategic advice to the Board of Directors for a large national retailer. The company was experiencing significant seasonal working capital swings, requiring it to reach accommodations with its lender groups to provide sufficient access to liquidity and time for new senior leadership to execute operational optimization efforts. The company is currently on track with its operational efforts and our support of the Board continues.

A private equity-owned provider of cloud-based software and integrated payment processing company engaged Deloitte T&R's Cash & Working Capital Services team to assist in providing guidance on short-term operational cash flow forecasting processes, as well as exploring longer-term levers for cash flow improvement. The company was facing liquidity challenges in the prior quarter and Deloitte assisted in developing and refining a 13-week cash flow forecasting model and helped stand up cash management reporting and tracking processes to support ongoing monitoring and operations.

Deloitte T&R was engaged to provide advice to the primary benefactor of a not-for-profit Liberal Arts University challenged with financial and operational issues and high leadership turnover. Deloitte T&R advised on strategic alternatives and developed both a short-term cash flow model and a three-year, multiple scenario model to assess the impact of various strategic options.

Deloitte T&R currently served as the advisor to a manufacturer and its international union as they shut down a joint training and human resources center. Deloitte T&R has developed a work plan and cash flow estimates/budget for the wind-down period and advised the client on various wind-down matters, including, asset sales and transition, document and information retention, and contract disposition.

Deloitte T&R is currently serving as financial advisors to the senior secured lenders of a reputed company. The company filed for Chapter 11 in Spring 2024. Deloitte T&R has been working with the prepetition and debtor in possession (DIP) lenders, the company, and its interim management to size the company’s liquidity needs through the Chapter 11 process and structure the lenders’ stalking horse bid through a plan of reorganization. The reorganized company exited Chapter 11 in fall of 2024 with a new ownership structure and new capital commitments from investors.

Deloitte T&R was engaged by a highly regarded middle market private equity firm to assist a resource-constrained portfolio company with required operational reporting. Deloitte T&R helped the portfolio company develop a dynamic, and automated financial model that accepted data from 3 separate enterprise resource planning systems (ERPs) and produced weekly and monthly key performance indicator (KPI) flash reports. The model also generated accurate 13-week cash flow projections, which provided PE management with critical insights into future working capital and debt/liquidity issues.

Deloitte T&R served as the financial advisor to a large wine production, distribution, and branding company in a severe liquidity crisis. The company was impacted by declining demand for its wines, struggled with the integration of various acquisitions, and was in the process of new senior management and significant headcount reductions. Deloitte T&R worked closely with senior management and its lenders to enhance short-term cash flow forecasting and business plan development while supporting the ongoing efforts to sell noncore assets as part of an overall business rationalization.

Deloitte T&R is engaged as a financial adviser to the lenders of a global live-media production hardware/software business. The company breached covenants and missed financial performance targets during the past two quarters. The Deloitte T&R team was hired to assess management's sales process of certain non-core businesses; to assess management's approach to securing asset-based lending for additional liquidity; and analyze and report on the financial position, drivers of the underperformance and the company's 2023 business plan, and latest financial forecasts. This mandate includes analyzing debt and operational restructuring options, in support of reducing exposure for the existing lenders.

Deloitte T&R has been chosen by a major private equity investor to assist one of its portfolio companies in the health care services arena. Our client successful transacted on the majority of this business unit resulting in a great outcome. Thereafter, assistance was needed as it worked through the winding up of the unsold components of the business and the steps required to dissolve the balance of the company.

Deloitte T&R served as a financial advisor to a large private construction company that suffered significant losses mainly from complications associated with a difficult Enterprise Resource Planning implementation. The company had to arrange a significant loan from its longstanding lender. That short term financing was maturing and the company needed to renegotiate renewed funding as maturity neared. Deloitte T&R was able to provide advice and recommendations as in connection with the company's evaluation of its business plan and to support the company in its discussion with its lender regarding such business plan.

Deloitte T&R advised a global E&P company on the financial risk associated with a global EPC (engineering, procurement and construction) company it had engaged to construct a multi-billion dollar project. We analyzed quarterly financial statements, provided forecasts based on management guidance, and provided a market-based credit risk evaluation for the client every quarter for the past two years.

Deloitte T&R was hired by a $4 billion global manufacturer to assist with the company's managed exit tax record retention requirements with respect to winding down various domestic and international sites. Deloitte T&R assembled a scalable team of restructuring, tax, and IT specialists from our network of the global member firms of Deloitte Touche Tohmatsu Limited and worked with the company to assess its tax record retention requirements and assist with the tax record retention execution for the identified sites.

Deloitte T&R was retained by one of the world's leading vertically integrated manufacturers of custom-engineered rare earth and rare metal products to assist with its emergence accounting efforts. To assist the company, Deloitte T&R has assembled a cross-border team of specialists who are working closely with Deloitte LLP in Canada to be able to advise the company on various complex valuation, industry, and technical accounting items.

Deloitte T&R currently serves as the financial advisor to the secured lender of a multi-concept restaurant chain to provide a business assessment, including four-wall profitability analysis, and analyze certain transactions related to the borrower's joint venture operations.

Deloitte T&R was hired by this national specialty retailer to help strategize and execute liquidity optimization strategies. Through our efforts and analysis, the national specialty retailer has been able to manage seasonal working capital challenges while still maintaining its growth strategy.

Deloitte Cash & Working Capital Services assisted in identifying and advising on implementing Order-to-Cash and Procure-to-Pay improvements to a health care technology company. The company provides rules-based claims payment solutions for payers and TPAs, and is backed by a leading global alternative asset manager and private equity group.

Deloitte's Cash & Working Capital team was retained to perform a working capital assessment with focus on quantifying the opportunity value for future improvements, in connection with alignment of the processes following multiple acquisitions.

The Deloitte Cash & Working Capital Services team assisted in identifying and advising on Lead-to-Cash improvements for a customer experience and call center technology company. The company is backed by a leading private equity group and was experiencing challenges identifying root causes for the delays in customer collections. Deloitte assisted in identifying key root causes for delayed collections, and provided recommendations related to a billing in arrears model and backlogs created as a result of purchase orders challenges.

Deloitte T&R serves as the financial advisor to a health system that is currently out of compliance with its bond financial covenants. In addition to assisting management with identifying potential affiliation options, Deloitte T&R assessed the health system's financial and operational performance, management's turnaround plan(s), and developed further performance improvement recommendations in order to assist the health system in re-establishing bond covenant compliance.

Deloitte T&R served as the financial advisor and then the chief restructuring officer (CRO) for a renowned global manufacturing company in the printing and converting industry. After years of successful operations, the company faced severe liquidity challenges due to its global expansion strategy. As CRO, Deloitte T&R managed various aspects of liquidity, including relationships with unsecured creditors, supply chain disruptions, secured lender issues, and cash flow projections. Deloitte T&R also helped enhance working capital, reduce operating costs, and facilitated the out-of-court sale of assets and balance sheet restructuring to safeguard long-term customer and vendor relationships.

A successful $1 billion distributor of food products engaged Deloitte to assist the company in developing their five-year strategic plan. Deloitte worked closely with the board and senior management to develop a detailed financial model to allow the simulation of several strategic initiatives being considered by the company. Modeling various scenarios in one integrated model, provided the company with a better understanding of its cash needs, debt requirements, impact to working capital, capex requirements, sales, and EBITDA for all initiatives. A rapid operations diagnostic identified several potential projects to improve profitability and improve inventory turns. One specific element of these initiatives was SKU rationalization.

Based on an increased focus due to the impacts of COVID-19, a multi-billion-dollar transportation company recognized an opportunity to improve its cash conversion processes and engaged Deloitte T&R to help it improve its working capital performance. With a target of more than $500 million in savings, the increased cash can allow the company to make other strategic investments and technology upgrades.

Deloitte T&R served as financial advisor to a private equity–backed technology company that has integrated multiple acquisitions over the last year. The company has engaged Deloitte T&R to help them focus on identifying and achieving working capital improvements across the business focused on the procure to pay and order to cash processes. An initial assessment identified up to a 30% improvement opportunity to reduce their accounts receivable (AR) balance and up to a 50% opportunity to increase accounts payable (AP). To date, the company has achieved a 10% reduction in AR and a 30% improvement in AP.

Deloitte T&R assisted the executive management team in evaluating strategic alternatives around the issues of operating challenges and management changes that the company was facing, as well as potential sale scenarios. Additionally, Deloitte T&R helped the financial management team with analyses to isolate root causes of underperforming projects, evaluate liquidity sufficiency and bonding capacity needs, and elevate the quality of financial performance. The supporting analysis work shifted to assist management in the company's needs of diligence responses to interested buyers. Further analysis of long-term incentive plans led to better retention during the sales process. Deloitte T&R remains an adviser to the executive management board around complex issues.

Pursuant to its obligations under the Credit Agreement Amendment, the company engaged Deloitte T&R to provide services as the company's chief strategic officer (the CSO). Deloitte T&R will work collaboratively with management and the company's investment banker, coordinating with the company's other restructuring professionals, attorneys, and financial advisors to assist in implementing selected restructuring strategies, including; assessing the company's business plan and operations to identify potential performance improvement initiatives, developing and implementing the company's financial and operational turnaround strategy and associated activities, overseeing the management of the company's liquidity issues, and managing the relationship with the company's lenders and creditors.

Deloitte T&R was retained by a large regional health system to perform transactional, strategic, and turnaround advisory services related to a proposed partnership with a national long-term care company and subsequent development of a comprehensive post-acute care continuing care network.

Deloitte teams from the United States and Europe were retained by the lending syndicate (located in London, Paris, New York, and Toronto) to a large global aviation finance company, reeling from the impact of COVID-19 and choking off 90% of its income, and the precipitous downturn of the airline industry. Working closely with counsel, Deloitte assisted with restructuring negotiations on behalf of these lenders and between the lenders, bondholders, shareholders, and borrower. Our ability to bring to bear specialist industry sector experience, contingency planning, and deal implementation experience was pivotal in achieving an effective outcome for our clients.