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Certified Turnaround Professionals (CTPs)
Several members of Meridian’s
senior management team have earned the distinction of becoming
Certified Turnaround Professionals (CTPs). The process is similar
to that required to become a CPA or an attorney. Education and
work experience requirements are very demanding, as is the examination
given to test one’s knowledge. By engaging a CTP, a company
can feel confident about the professional’s qualifications,
integrity and caliber of work.
The following lists the Body of Knowledge, a summary of the
information a CTP must know in order to pass the requirements established
for certification. The Body of Knowledge that a CTP must understand and master
is comprised of three parts; 1) Accounting and Tax Practices, 2) Bankruptcy
and UCC Law, and 3) Management and Cash Flow Practices. Each CTP must pass
a rigorous examination to demonstrate a superior-level of understanding of
each of these areas of knowledge.
ACCOUNTING
1. Understanding Financial Statements
- Balance Sheet
- Statement of operations
- Statement of cash flows
- GAAP
- Limitation on usefulness of information
- Financial statement analysis
- Business failure
- Detection of failure tendencies
- Financial statements issued in Chapter ll
- Accounting for out-of-pocket workouts
2. Financial Markets
- Nature
- Market economy
- Consumption choices
- Competitive nature
- Money markets
- Capital markets
3. Cost of Capital
- Value of bonds
- Value of preferred stock
- Value of equity
- Techniques
- Uses
4. Valuation of Business
- Liquidation
- Going concern (reorganization) values
- Single asset values
5. Capital Structure
- Objective: maximize value
- Theory
- Business risk and financial risk
- Operating leverage
6. Financing Leverage
- Debt maturity – short-term vs. long-term borrowing
- Factors considered in practice
- Chapter 11 or out of court workout
- Sources of capital
- Working capital
- Equipment
- Real Estate
- Venture capital, R&D syndications
- Public
- Financing the turnaround
- Use of cash collateral
- Debtor-in-possession financing
- Shareholder value
- Objective
- Importance
- Method to determine
- Uses
- Impact for financially troubled business
- Cost Analysis
- Cost behavior
- Cost/volume/profit analysis
- Profit planning and budgetary control
- Cost concepts and flows
- Types of budgeting
- Importance of annual and long-term plans
- Budgeting for troubled business
- Flexible budgets
- Capital budgets
- Performance measurement
- Financial control systems
- Shareholder value
- Tax awareness
- Pre-planning considerations
- Treatment of income during bankruptcy period
- Corporate reorganizations
- Availability of net operating losses
COMMERCIAL AND BUSINESS LAW
1. Secured Transactions
- Transactions governed by UCC Article 9
- Requirements to attach security interests
- Requirements to perfect security interests
- Multi-state transactions
- Priority rules, conflicting collateral claims
- Rights of the secured creditor
- Remedies on default
2. General Contract Issues
- When is a writing required?
- When is a binding contract created?
- Principles of contract interpretation
- Damages for breach of contract
- Specific performance of obligations
3. Judicial Debt Collection
- Pre-judgement remedies
- Obtaining a judgement
- Post judgement collection
BANKRUPTCY LAW
1. Types of Bankruptcy Relief – The Essential Aspects of Chapters 7, 11, 12, and 13 Relief
2. What Types of Enterprises may be Debtors under the Bankruptcy Code? – Under what Circumstances may a Bankruptcy Court dismiss a Bankruptcy Case?
3. Bankruptcy Case Commencement
- What types of information must be filed?
- Under what circumstances may a case be commenced involuntarily against debtor?
4. Effects of Bankruptcy Filing
- Automatic stay
- Property of the estate
- Constraints on management
5. Debtor In Possession Financing and Cash Collateral
- On what basis may a debtor obtain DIP financing?
- What protections can be offered to DIP lenders?
- What is “cash collateral?”
- When may a debtor use cash collateral?
6. Use, Sale and Lease of Property of Estate?
- How does a debtor continue operations after a bankruptcy filing?
- When may a debtor use, sell or lease property without court permission?
- When is court permission required?
- Effect of sale of major assets
- Sales free and clear of liens or other interests
7. Parties in Chapter ll Proceedings
- What is the function of the U.S. Trustee?
- What is the function of Committees?
- Under what circumstances may a trustee be appointed?
- Under what circumstances may an examiner be appointed?
8. Trustee’s Avoiding Powers
- Who may exercise avoiding powers?
- Who benefits from avoiding powers?
- Trustee’s strong arm power
- Trustee’s power to assert rights of actual unsecured creditors
- Trustee’s power to avoid statutory liens
- Trustee’s power to avoid preferences
- Trustee’s power to avoid fraudulent transfers and obligations
- Setoff
- Post-petition transfers
- Liability of transferees of avoidable transfers
- Preservation of liens for benefit of estate
9. Executory Contracts – What are They?
- Assuming or rejecting executory contracts
- Remedies for breach of contracts
- Effect of bankruptcy, financial condition, and non-assignment clauses
- Rights/obligations under property leases
- Bankruptcy of real property lessors/sellers
- Collective bargaining agreements
10. Claims and Interest
- Proofs of claim
- Allowable claims
- Secured and unsecured claims
- Estimation of claims
- Priorities
- Equitable subordination
- Environmental claims
11. Chapter 11 Plan
- Exclusive period to propose plan
- Treatment of administrative expenses
- Treatment of tax claims
- Treatment of other priority claims
- Treatment of secured claims
- Treatment of general unsecured claims
- Classifying claims and interests
- Substantive and procedural consolidation
- Mandatory and permissive provisions of plan
- Disclosure statements
- Soliciting plan acceptances
- Voting requirements
- Good faith requirements
- Discharge
12. Bankruptcy Courts and Jurisdiction
- Structure of bankruptcy court system
- Jurisdiction over cases
- Jurisdiction over proceedings
- Personal jurisdiction issues
13. Tax Issues in Reorganization Cases
MANAGEMENT
1. Cause of Business Failure – External/Internal
2. Early Warning Signs of Decline/Failure
- Adverse trend signals
- Indicators of bad mangement/structure
- Industry and environmental problems
- Bankruptcy prediction models
3. Requirements for Successful Turnaround
- One or more viable core businesses
- Adequate bridge financing
- Adequate organizational resources/skills
4. Characteristics of Effective T/A Managers
- The key roles of turnaround managers
- Necessary managerial skills
5. The Stages of the Turnaround Process
6. Management Change Stage – Select the T/A manager, replace existing top management
7. Situation Analysis Stage – Select the T/A manager, replace existing top management
8. Design/Selection of Turnaround Strategy Elements of effective plans, types of strategies
9. Emergency Action Stage
- Take charge, get control of cash flow
- Financial and marketing management
- Manufacturing/operations management
- Managing engineering and R&D
- Changing the culture
10. Business Restructuring Stage
- Financial and marketing management
- Manage manufacturing, operations, engineering, and R&D
- People and organizational management
11. Return to Normal Stage
- Financial and marketing management
- Manage manufacturing, operations, engineering, and R&D
- People and organizational management
For more information on Turnaround Strategies, a Bankruptcy Primer or the Role of a Creditor on the Unsecured Creditors Committee, please see Resources.
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