01
First establish whether there is a viable business to preserve
Distinguish a temporary liquidity gap from structural insolvency. Review debt, security, enforcement, mandatory payments, critical contracts, governance disputes and insolvency indicators; compare going-concern value with the liquidation outcome.
- Business
- Margins and demand after debt relief.
- Debt
- Creditors, maturity, currency, covenants and security.
- Control
- Decision rights before and after restructuring.
- Downside
- Insolvency scenario and expected recoveries.
02
Restructuring starts with a 13-week liquidity model
The model determines minimum new money, critical payments and the cash-out date. Taxes, payroll, continuity suppliers, insurance, rent, energy and collateral preservation are mapped separately.
03
A standstill buys time; it does not solve the problem
Define suspended enforcement and default rights, permitted payments, information undertakings and termination events. Test authority and the continuing effect of guarantees, security and default interest.
04
The term sheet links economics to legal implementation
Set haircut, maturity extension, repayment profile, interest, cash sweep, covenants, non-core disposals, budget control, reporting and re-default consequences. Test every term in the model before long-form drafting.
05
New money needs its own protection
Define source, use, draw conditions, security and ranking. Multiple lenders require an agreed waterfall, no double security and coordinated enforcement rules.
06
Debt-to-equity changes control as well as leverage
Assess valuation, claim amount, dilution, governance, merger and sector approvals, foreign investment, tax and creditor exit. The legal outcome must match the agreed economics.
07
For an LLC, the route depends on how the debt arose
A conventional capital increase requires corporate approvals, contributions and registration. Article 19.1 of the LLC Law provides a special set-off route for a pre-agreed convertible loan, including unanimous prior approval and a notarial process.
08
For a JSC, issuance mechanics are central
Cash claims may be set off against additional shares placed by private subscription. The process must address the placement resolution, price, pre-emption, valuation, issue registration and Bank of Russia filings.
09
Multiple creditors need rules agreed in advance
The intercreditor agreement sets priority, payments, standstill, voting, enforcement, proceeds and new-money treatment. Without it, one bilateral enforcement action can undo the common plan.
10
An insolvency settlement is a separate court route
It may be agreed at any insolvency stage and takes effect after court approval. The law permits repayment schedules, transfer in lieu, novation and—subject to individual creditor consent—exchange of claims for interests, shares or securities while protecting other creditors.
11
Test the plan for challenge and equal treatment
Review preference, undervalue, related parties, security leakage, waiver and knowledge of distress. Document commercial rationale, restoration forecast and creditor recovery comparison.
12
A restructuring closes like a transaction
The checklist combines waivers, corporate approvals, amended facilities, security, filings, issuance, funds flow and intercreditor effectiveness. Post-closing monitoring covers reporting, covenants and milestones.
13
Initial review pack
Debt and security register; finance documents; defaults and demands; 13-week cash flow; management accounts; budget; litigation and enforcement; tax; critical suppliers; corporate structure; licences; valuation; disposal plan; creditor proposals; draft term sheet.