Insights

The Critical Role of the Chief Restructuring Officer


Michael Fingland

Executive Director and CEO

We are currently dealing with a 1 in a 100-year crisis with no sign of tough conditions easing.

These market conditions will accelerate the already rapid growth of the Chief Restructuring Officer role.

The CRO’s primary objective is to work closely with the Board, CEO and management team, to initiate and coordinate restructuring actions and lead the management of stakeholders.

They work closely with management to redefine and work toward a core sustainable and profitable business. They minimise the risk of business collapse, rebuild business value, improve forecasting and cash management. By improving cash flow visibility, this enables management to be proactive rather than reactive.

A CRO will take responsibility for developing and implementing restructuring plans, take a lead in negotiations with lenders and creditors, provide or coordinate expertise in the transition and play a key role in rebuilding or strengthening relationships with stakeholders.

Forward-thinking companies in Australia are already actively incorporating CROs into their management teams.

At Vantage Performance, we have been embedding CROs for some time. And not just into troubled businesses – CROs are also guiding capital raising, post-merger integration, profit improvement and operational restructuring.

Financiers, private equity and investors alike often expect a CRO to be engaged to assist in restructuring activities before they will agree to funding.

Placing an effective CRO in a business allows them to take charge of developing and implementing a restructure plan, leaving management (now insulated from the detailed reorganisation process) free to focus on the core business and day-to-day operations.

A business might use a CRO if:
– the board and management team are overwhelmed
– cash flow is becoming tighter and there is increasing pressure to find a solution
– management lacks the skill set to manage the challenges or stakeholders
– bankers/financiers are losing confidence in management’s capability or plans
– fresh ideas, support and energy are needed to identify and implement solutions.

A CRO has specialist knowledge in restructuring and turnaround situations. They can be of benefit whether it’s a short term cash crunch or a more fundamental issue within a business – from post-merger integration to acquisition, divesting major assets or risk mitigation when planning for rapid growth.

The CRO model offers a more hands-on approach compared to consulting services, and when the business situation has stabilised, the CRO can focus on training the management team to ensure that the solutions are sustained long after they are gone.

Good CRO’s are required now more than ever and all Boards and Senior Executives should make themselves familiar with what a good CRO can offer.

How the CRO fits in to assist the Board and Management:

Please call for a confidential discussion on how a CRO can help you to navigate through these difficult times.

This article is general in nature and is not to be taken as financial, legal or governance advice. You should consider seeking independent financial, legal or other advice to check how the information relates to your unique circumstances. Vantage Performance is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly.

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Michael Fingland

My philosophy is that there is always a way to solve a crisis, as long as you’re engaged early enough.

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I believe that clear strategies and organisational alignment are fundamental for long-term business viability.