THEME - From distress to financial resilience: Keys to successful business turnarounds

  • 17 - 18 February 2025
  • Abu Dhabi, U.A.E.

EXCLUSIVE

Interview With Alexander

Alexander Erofeev

Chief Special Operations Officer
IFC
Norway

Questions

How do you foresee lenders coping with the volatility ahead, and resulting increase in corporateinsolvencies?

Being old enough to have seen several “perfect storms”, I would note that lenders’ issues repeat themselves. Part of the problem is that people move on and the institutional experience is lost.

Here is an example: lenders’ workout units never come prepared to the next crisis. Crises are always unexpected, so there is a need in a fast expansion with qualified resources, but how to achieve it? Training people from elsewhere within the organization doesn’t always work, as by the time they are trained the crisis is over.

As to insolvency regimes, I believe that more attention should be paid not just at what the law says, but who implements it (eg quality of judges, practitioners etc). Otherwise the best law will fail, which we have seen many times. And systems based on Chapter 11-like “debtor in possession” would fail even worse.

You’re joining the panel discussion (Financial Restructuring?) What are some of the key messages you aim to share through the panel?
  • Matters of properly staffing workout departments (as above). One thing we did at IFC, for example, is entering into framework agreements with a number of advisors to be able to bring their staff in quickly to beef up our capacity to cope with cases.
  • Importance of using a properly qualified restructuring advisor with specific skills relevant to the specific tasks, not just an advisor with a big name. Example: devising and monitoring cashsweeps. Very few advisors can do it properly.
  • Managing the lender group on complex cases. IFC is often involved in restructurings with a diverse lender population: international and local banks, IFIs, ECAs, debt traders etc. In such cases making the lender composition workable is THE main condition for a successful restructuring. Eg what to do with short term local lenders who create a constant refinancing risk? With those who have no culture of entering into standstills and intercreditor agreements? B-lenders who are not willing to entertain the agreed restructuring? Etc.
  • “Kicking the can” vs proper restructurings. Long-term importance of growing the culture of doing it once and properly. And for the latter – operational restructuring, without which the financial restructuring is meaningless.
  • New money in restructurings. Huge issue in emerging markets generally and in MENA. The supply is scarce (because big distressed investors look only at the largest cases, preferably in developed countries. IFC developed an “İRENA” (International Restructuting Navigation) platform. “Navigation” – because the position of a new money provider often gives you an opportunity to lead the whole restructuring and implant best practices. This platform has not been implemented yet, but we analysed the possibility for development banks to spearhead and facilitate provision of such new money.
Do you believe conference such as FRC 2024 can play a vital role in pushing the sector forward. What are your recommendations

Such events could play a very important catalytic role in bringing the profession together and defining the way forward. But for that, apart from the quality of the participants, the depth of the discussion is very important. Perhaps in the future such conference can be made longer, with more time allocated to specific topics, maybe workshops happening at the same time so that people could chose those that are of main interest to them…

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