Supporting Liquidity Management in a Reorganization Process
The Situation
One of the largest US providers of behavioral health services for residential drug and alcohol addiction treatment filed for Chapter 11 bankruptcy protection to address declining census and revenue combined with excessive leverage, through a section 363 sale process (asset sale). The debtor required help creating and maintaining an accurate 13-week cash flow forecast for creditors and the court – providing financial information for support of the sale process, managing lender and creditor communications, and addressing overall finance and accounting support. Accordion’s Performance Improvement and Restructuring Solutions team was selected to be the go-to partner for the engagement.
Services
13-Week Cash Flow Forecasting
Active Liquidity Management
Business Plan Reforecasting
The Execution
- Received CRO title by the Delaware Bankruptcy Court during the reorganization process.
- Worked with the debtor’s finance team, lawyers, and the lenders to establish timely, detailed and complete liquidity reporting for the debtor during reorganization.
- Reviewed and analyzed cash receipts, disbursements (payroll, wires, check registers, payables, etc.) along with other operating and non-operating costs .
- Refined the 13-week cash flow forecast model with dynamic drivers and update capabilities.
- Prepared a detailed DIP budget for creditor and court approval.
- Provided weekly updates on current liquidity and funding requirements along with key issues impacting liquidity to the debtor board, key management, and lenders.
- Prepared the debtor’s liquidation analysis required for the plan of reorganization.
- Analyzed payor mix and net reimbursement trends by facility and level of care to identify additional AR collection opportunities.
- Assembled and filed monthly operating reports to the US Trustee.
- Provided guidance on financial and accounting impact of bankruptcy proceedings, related causes of action, cures, and avoidance actions on the cash flow and financials of the debtor.
- Reviewed all professional fee charges for appropriateness and accuracy as outlined by the US Bankruptcy Code.
- Created the final budget for plan confirmation and administered the debtor’s estate post emergence.
The Results
Accordion supported the debtor’s operations with rigorous financial analyses providing liquidity insight and prepared required reporting during the Company’s reorganization process. As a result of our work, the Company successfully obtained additional DIP financing needed during the plan process. Additionally, our team guided the debtor and debtor professionals during reorganization negotiations to a sale transaction and ultimately to a successful confirmation for a plan of reorganization and emergence.