Short-term liquidity planning

Restructuring situations are often confusing. Due to the hectic pace of operations, those involved often do not have the clear overview required to concentrate on what is important in an acute crisis. The management of short-term liquidity is vital in this phase. Only proper planning ensures that no unpleasant surprises occur and that management does not lose complete control of the company. Stable liquidity planning thus forms the basis for any corporate restructuring.

Restrukturierungspartner have many years of experience in preparing resilient liquidity plans, even in difficult corporate situations and with frequently uncertain data.

The liquidity plan shows the extent to which action is still possible and the conditions under which the company can meet its current payment obligations. Liquidity planning forms the basis for on-going monitoring, target/actual comparisons and a later analysis of the causes of possible deviations.

The preparation of a valid liquidity plan is necessary in many respects in the restructuring process. First, it provides information about the solvency of the company. If a company is no longer solvent, the parties involved are legally obliged to file for bankruptcy. Valid liquidity planning is an instrument for obtaining on-going information about the company's solvency.

In addition to the criminal law aspect, liquidity planning for the company in question has various other liability-relevant aspects: Civil law can also make responsible parties personally liable depending on the point in time at which insolvency – or illiquidity - occurs. The parties in question can exonerate themselves in this respect by providing clean and valid documentation of the liquidity.

Liquidity planning is also of considerable importance for the restructuring process as a whole. In our planning, we reflect how much leeway the company has in the course of restructuring. This makes it an essential control tool that has to be created in a clean and reliable manner. It lends the necessary transparency to the process, without which restructuring would be doomed to failure from the outset.

Dr. Robert Tobias

Partner and Managing Director

+49 30 2064 3720 0

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