Weathering the Storm Part 6: Restructuring Considerations – Debt and Other Liabilities

  |  June 3, 2020

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Continuing our series on restructuring strategies, we now focus on debt and other liability considerations and their impact to cash flow:

  1. Debt Covenant Review – could trigger acceleration of cash debt obligations or require loan restructuring/modifications, which may result in charges to the P&L
  2. Defined Benefit Plans – curtailment/settlements may require interim re measurement of liability
  3. Taxes – Unfavorable and favorable tax impacts from restructuring activities
  4. Reporting – charges possibly excluded for non-GAAP metrics (i.e., adjusted EBITDA) and could require long-term liabilities to be reclassified to short-term

As companies consider their strategy to endure this pandemic, which is putting a prolonged negative impact on liquidity and operating results, they need to be aware of accounting and cash impacts from restructuring activities.

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