Please find bellow an automated translation of the article published in the Cobertura business magazine (original story here)


Jose Carlos Peluso
The signal is still alert to the Brazilian market. Companies that undergo restructuring do not predict great sighs of economy, even those that have managed to renegotiate the debt can put a foot wrong this year. The recession had an impact so deep that the total amounts of business debt totaled R$105,6 billion, second last lift the Serasa Experian. More than half, 54.4% of Brazilian companies is in debt, an all-time record.

The framework concerns, since these companies are at serious risk of not surviving, if not find credit lines. And more besides, is not just a matter of finding credit and quickly the problem. But, Yes, how to employ the structured way credit and compatible with your ability to cash generation. You need to get your efficiency “core business” (the strong point of the company) not to enter into a new vicious cycle and expensive. In addition, it is inevitable to restructure their businesses. This high indebtedness, in our view, will generate a ripple effect throughout the year. That is, if we have big companies with management in a cast, the negative dynamics of business will impact the movement of smaller suppliers and small businesses of which these firms foster.

However, the measures announced recently by the Government, in an attempt to seek a quick resumption of the economy, especially in relation to the tax debt of the companies, tends to provide oxygen to the large and medium companies. The MP 766/17 now offers a way to pay off part of the tax liabilities and debt with taxes and federal contributions. However, it benefits the large and medium, since small businesses do not have the same tax other conditions that can use any losses incurred until December 2015. In other words, the small are not framed in taxable income, the vast majority is simple and other Presumed or Arbitrated Profits, which do not allow them to join the MP. Another measure has been to reduce the Selic rate, which guides the financial market to cover bank loans, but takes into account also the “rating” (risk classification) of the company. Once again, the large and medium-sized lead advantage, because they can offer real guarantees, mortgages and/or even divestitures fiduciary, what makes the interest rate more palatable. In this case the Selic, the reduction does not benefit small and even for a certain range of the averages that are still picking up, but when they pay a tax guy. Today, we live in a moment of “guarantees”, on the other hand the funders, other suppliers and even the Brazilian business community seeking ways to be able to run the company on a credit shortage.

For example, a packaging company, in São Paulo, resorted to external financial advice to reorganize the company, once the partners have already predicted a worsening of the country’s economy. Since last year, we act on the restructuring of the company seeking to stop the bleeding and perform the renegotiations with suppliers. We have achieved the financial stability necessary to initiate a job to revive the commercial Department to stabilize and improve the performance of the company until the end of the restructuring process. This scenario is common, but the data announced by the Professionals concerned, since many of them fail to working capital. On the other hand, is very common among the business community understand a certain relief when in fact we can renegotiate debts and organize a new dynamic of management. However, it renegotiated the debts that the company is good, it is necessary attention and a lot of serenity in 2017.

The high indebtedness has stopped many businesses still in 2015 and who managed to rearrange the House in time, currently manages to evenly seek new paths overlooking a more positive scenario for 2018, when we believe that companies will make breathing positively. The period is most critical for retailers and the service sector, but also points to research professionals, of which must pull new consolidations this year. Of the total defaulted companies, 45.2% are commercial (trade in beverages, clothing, vehicles and parts, electronics, among others), 45% are in services (bar, restaurant, beauty salons, tourism, among others) and 8.9% are industries, indicates the Serasa study with data from April last year.

In addition, if we look at applications for reorganization in 2016, based on the report by professionals, we have another record of approvals and a growth of 45% compared to 2015 (1514 requests granted in 2016). According to the institution last year were approved 890 applications (micro and small enterprises), 397 (medium-sized) and 227 (large), a total of 1514 new companies that pass by RJ. Means that these companies are in the process of financial restructuring, reducing costs and come in 2017 with the condition of keeping your current payments on time, in addition to the liabilities renegotiated with the RJ. Is a dangerous year and brings a big alert for companies that don’t have restructured their businesses. I don’t consider myself a negative, but very cautious Executive. Legal recoveries serve to save, securing jobs in the first place, why emphasize the importance of this moment. The great wave of RJ needs to happen for that new layoffs don’t happen and other enterprises are not affected in the chain of production.

The warning I can give, with the experience we have gained in those 12 years with 11,101/05 law, which regulates the Judicial reorganization, is that she is a ‘ bitter pill ‘. However, it cannot be forgotten and, above all, that the perpetuation of the company will depend on don’t fall into the trap of the past. This is where our contribution is essential. We saw unsuccessful cases, mainly because, to receive the approval of plans of RJ, incurred in the mistake of thinking that everything would be resolved. Repeated the same missteps that led to the crisis and, consequently, the non-recovery of the company. With regard to restructuring that don’t need that ‘ bitter pill ‘, it is important to understand that renegotiating the debts is not enough without first reviewing the company’s operating performance and cash generation. We assist our clients in renegotiations seeking to understand how the revision of these liabilities can improve the performance of the company and if she is able to generate strategic mode box.

Has a master’s degree in accounting from PUC-SP and MBA from Fundação Dom Cabral. www.naxentia.com.br


Story originally published here.