The reality of business now is that any business can be international. Whether it is the local shop that also sells online or a manufacturing business that has factories in multiple countries around the world.

The things that make matters more complex (and interesting) during a company’s trading life also add additional challenges should the business fall on harder times. Over the years we have dealt with a variety of businesses in different countries, but we had another example recently where a multinational group needed to take some urgent steps to salvage the parts of the group that were successful whilst safely jettisoning those that weren’t.

The group was represented in five different jurisdictions; including the US and Singapore and had seen a significant shift in its business over recent years, some (although not all) due to COVID. The reality was that whilst there was still a core business which was sustainable, the current status quo was not.

In any international restructuring there are a number of key factors to be considered:

• What is working and what isn’t? Most of the time the Board know this although it isn’t always as easy to confirm as it should be.
• What are we legally allowed to do with those parts that aren’t performing in that jurisdiction? Even within Europe the answer to this can be hugely different and when you spread the net wider it only ever gets more complex.
• What is the potential for cross-contamination? No business in a group exists in splendid isolation, local legislation, inter-group loans and cross guarantees all need to be bourn in mind when deciding whether an orderly winddown is more preferable to any “walk away” liquidation.

Milsted Langdon has been a member of MGI, a top 20 international accounting network, for years and this was yet another example where being able to call on local experts was crucial. Having looked at the various jurisdictions and the success or otherwise of the entities, it quickly became clear which ones needed to fall by the wayside. Of course, reaching that conclusion was not as simple as making it so.

We used our local colleagues to plot out the processes in those jurisdictions, engage the appropriate experts and advise on potential pitfalls so that the Board could make an informed decision on what steps to take.

Ironically, in the end one of the jurisdictions where there was no need to undertake any formal insolvency was the UK, but we were able to prove that it is not necessary to go to the larger firms to get that level of international expertise.

For more information, please get in touch with our Restructuring and Insolvency team here.