Case Study
Project CRO Feedmills
Ongoing- Type of Case :
- Creditor Support and Advisory
- Title :
- CRO and Steering Committee Support
- Status :
- Ongoing
- Value :
- IDR 3.2 trillion
PROJECT OVERVIEW
- A series of external competition driven shocks combined with an ill-fated expansion into Java pushed our client, a West Kalimantan integrated poultry Group, into default on its outstanding debts. After bilateral discussions with its creditors on restructuring its debts failed, two of its creditors filed a PKPU petition in the commercial court against.
- We were brought immediately following the PKPU filing. We found the situation between the Group and its Creditors highly contentious.
- Our mandate was the implementation of the agreed court approved Composition Plan post PKPU as CRO and support for the creditor Steering Committee formed as an oversight function.
PROJECT ISSUES
- Prolonged operational issues and competitive pressure on margins stripped working capital from the Group, limiting operations. The need for additional working capital became a critical issue in restructuring negotiations.
- Stakeholder-creditors consisted of parties with differing interests, which complicated the negotiation process. This was further complicated by the sale by a major bank of its debts in the Group to a distress fund.
- Poor financial reporting systems and weak local audits gave rise to concern over numbers being reported and used.
WHAT WE DID
- Chief Restructuring Officer. Under this mandate we: (1) worked together with the BOD of the Group to implement and execute the restructuring terms under the Composition Agreement; and (2) conducted cash monitoring and payment review and approval work. A major component of the CRO role was the review and implementation of a new accounting system and initiation and oversight of non-operating asset sales, and support for the sale of the business operations.
- Steering Committee Support: Under this mandate we supported the Creditor Steering Committee in the execution and administration of their responsibilities under the Composition Plan.
PROJECT OUTCOME
- The composition plan was approved by the creditors including the sale of non-operating assets and the core business to settle the outstanding debts with any short fall to be written off.
- The Creditor Steering Committee was successfully established and has been effective in their role as defined under the Composition Plan.
- The sale process remains on-going.