Restructuring and Turnaround

Disruption is relentless. Having the right strategy to restructure or turn around an organization can help turn adversity into opportunity.

Organizational disruption is not new, but in today’s environment it has grown more complex. From the COVID-19 pandemic, geopolitical uncertainty, cross-border trade restrictions, technology and supply chain disruption to customer channel changes, liquidity issues, legislation alterations and shareholder activism, organizations are facing an unprecedented array of urgent event-driven issues against a backdrop of increasing uncertainty. Organizations need to be resilient and agile in order to create, preserve and recover value.

Business restructuring — whether that be an operational turnaround or a financial restructuring — can be a vital tool in preserving value for a company and its stakeholders. From refinancing and cashflow improvements, to the divestment of assets and management of liabilities, there are a range of ways executives can maintain value in their organization.

Connected globally, delivered locally. Digitally enabled with smart analytics. Our pragmatic hands-on approach, combined with deep sector experience and independent perspectives, has proven success in helping leaders reshape for a better future.

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The better the question The better the answer The better the world works
Case Study

How to determine a solid path forward in a liquidation

British Steel needed a buyer to avoid closure and to continue the iconic brand, but a sale was never guaranteed.

Case Study
The better the question The better the answer The better the world works
Case Study

Can heavy industry be reshaped for a sustainable future?

British Steel was in urgent need of a suitable buyer to avoid closure.

A sense of history comes to the fore when reshaping a traditional organization like British Steel. Since its establishment 150 years ago, British Steel has been central to European and nationwide steel production and employment in the industry. By directly and indirectly supporting 23,000 jobs, the steel plant in Scunthorpe – one of the company’s main sites, with others across the UK, France and the Netherlands – has a vital role to play in the lives and wellbeing of those connected to it.

However, steel production in the UK has tumbled from its peak in the 1970s and commercial pressures have increased in recent years, threatening these jobs and the local economy. Greater supply internationally has pushed down prices, making higher cost operators less competitive in the global markets.

As a result, heavy industry organizations like British Steel are in a state of transition. If they are to survive, these companies – and by extension the local communities they support – must transform to recover their value.

In the case of British Steel, it had become clear in 2019 that its cashflow position was no longer viable – it could no longer afford to buy necessary materials or carbon credits from the EU to let it continue trading. It was in critical need of a buyer and a fresh, sustainable business model in order to avoid closure. According to Antonius Ron Deelen, CEO of British Steel, “The real reason that British Steel got into the situation we were in before EY joined was twofold: the cashflow of the company and bad messaging; people did not see the real situation British Steel was in and, therefore, were not prepared to take the measures needed.”

In May 2019, the British High Court granted an order to place British Steel into compulsory liquidation. The Official Receiver was appointed as liquidator and he concurrently petitioned the Court to appoint Sam Woodward, Alan Hudson and Hunter Kelly of EY to act as Special Managers to assist the Official Receiver with his duties as liquidator.

  • The role of the Official Receiver and the Special Managers

    The function of the liquidator appointed by the Court is to secure all of the company’s assets, realise them and distribute proceeds to the company’s creditors.

    In the case of British Steel, the Official Receiver as liquidator was responsible for overseeing the entire liquidation process and statutory compliance, and with the assistance of the Special Managers also appointed by the Court, they together ensured the best outcome was achieved for the liquidation. EY, as Special Managers, ran parallel processes that prepared for both the wind down and closure of British Steel, as well as for the sale of the business as a going concern. The relative outcome to creditors of each scenario would ultimately dictate the future of British Steel.

British Steel’s legacy and its multi-generational workforce, who were heavily invested in the plant and its survival, made this insolvency unique. “The number of people we came across as third-generation family employees was mind-blowing,” says Sam Woodward, EY-Parthenon Turnaround and Restructuring Strategy Partner. This feeling of personal significance is echoed by Paul McBean, Community Union and Multi-Union Chairman of British Steel who says of the Scunthorpe plant, “Closure would have been devastating. We have other businesses in town, but the vast majority of businesses here rely on the steel industry.”

Both the Official Receiver and EY were aware of the importance of British Steel to its employees, suppliers, customers, local communities and the wider economy. However, emotion could not overrule legislation and the Official Receiver and EY had a role to fulfil to meet statutory obligations. Working with multiple stakeholders, EY set about devising a strategy for the liquidation that included planning for wind down and closure while in parallel assessing the possibility of realizing value from a sale of the business, in whole or in part. The ultimate aim was securing the best possible outcome from liquidation, and while the chances of a going concern sale appeared remote, the counter factual to closure needing testing.

Old railway track awaits recycling outside bsl scunthorpe plant
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The better the question The better the answer The better the world works
Case Study

In an interconnected world, think both local and global

EY’s international capabilities were crucial to delivering the best outcome.

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A bucket tilts over a furnace mouth at bsl scunthorpe plant
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The better the question The better the answer The better the world works
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Forging a new chapter of British Steel

Fresh investment in British Steel will protect livelihoods and boost value creation.

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New steel rails at bsl scunthorpe plant

Restructuring and turnaround awards and recognition

Some of the recent awards won by member firms of Ernst & Young Global Limited include:

Image for 2020 TRI Awards - International Firm of the Year

TRI Awards 2020: International Firm of the Year winner (global award)

Image for 2021 IJGlobal Awards

IJGlobal Awards 2020:  European Social Infrastructure Healthcare PPP deal of the year winner (EMEIA award)

Image for 2020 TRI Awards - Best use of Technology

TRI Awards 2020: Best Use of Technology winner (UKI award)

Image for 2021 Turnaround Atlas Awards

Pre-Pack Restructuring Of The Year — Mid-Markets; Industrials Restructuring Of The Year; Private Equity Deal Of The Year — Large Mid-Markets

Contact us for immediate support through these volatile and uncertain times

We have a clear view of the critical questions and new answers required for effective crisis management, business resilience and continuity.

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Contact us for immediate support through these volatile and uncertain times

we have a clear view of the critical questions and new answers required for effective crisis management, business resilience and continuity.

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