There are a number of Private Investment Firms that will invest in troubled or distressed situations, either before or after a company has filed for bankruptcy protection under Chapter 11. The experience and resources of these firms enable them to creatively fashion financing structures that both preserve the business and return it to a growth posture. The participation of the Private Investment Firm can help alleviate the stresses associated with bankruptcy proceedings and other workout situations.
The operating strategy is to focus on providing adequate liquidity and flexibility while quickly reducing costs and streamlining operations to insure the company’s long term success. They often work with existing owners who wish to retain a minority investment in their company.
A good turnaround firm can bring new management with fresh ideas to distressed situations or work with existing managers to quickly bring about appropriate and necessary change. Generally the firm will have long term relationships with lenders and mezzanine investors as well as other equity investors to enable the firm to act decisively in situations where time is of the essence.
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