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Financing & Cash flow are the biggest issues facing business today
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Oakville, Ontario
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QUOTE
"In the middle of difficulty lies opportunity." — Albert Einstein
This quote resonates deeply with restructuring financing, as it captures the essence of transforming business challenges into opportunities for renewal and stronger operational foundations.
Table of Contents
Introduction
Understanding Restructuring Financing
Why Assets Matter in a Restructuring
Specialized Nature of Restructuring Finance
The Goal of Restructuring: A Stronger Company
Priority and Pricing in Restructuring Loans
Advantages for Restructuring Lenders
Industry Differences and Lender Expertise
Maintaining Operations During Restructuring
Conclusion
Introduction
Restructuring financing helps Canadian businesses stabilize cash flow, manage debt, and maintain operations during financial distress.
When banks decline support, this type of capital provides a lifeline for companies facing temporary setbacks caused by market shifts, rapid growth, or economic pressure.
Let the 7 Park Avenue Financial team show you how understanding how restructuring financing works—and when it’s the right solution—helps business owners make informed decisions and protect long-term viability.
Your Business Deserves a Second Chance
Your company is bleeding cash, creditors are calling daily, and traditional banks have already said no.
The stress keeps you awake at night, wondering if you'll make next week's payroll.
Restructuring financing provides the capital and breathing room you need to reorganize debts, stabilize operations, and rebuild your business on solid financial ground without liquidation.
Restructuring financing helps companies stabilize operations during financial distress. Many owners misunderstand how it works and when it is available. This guide clarifies the fundamentals so managers can make informed decisions.
3 UNCOMMON TAKES ON RESTRUCTURING FINANCING
Restructuring financing often costs less than continuing with your current debt structure.
Most business owners assume distressed financing comes with punitive rates, but when you calculate the cost of maintaining unsustainable debt service, vendor penalties, and lost opportunities, restructuring can actually reduce your total financing costs while improving cash flow.
The best time to pursue restructuring financing is before you're desperate.
Contrary to popular belief, waiting until you're in crisis mode dramatically reduces your options and increases costs. Companies that proactively seek restructuring when they first identify cash flow trends deteriorating secure better terms and maintain more control over the process.
Restructuring financing can strengthen your competitive position. Rather than simply being a "band-aid," properly structured turnaround financing often forces beneficial operational changes, removes legacy cost burdens, and positions your company to capitalize on opportunities that financially stressed competitors cannot pursue.
Understanding Restructuring Financing
Restructuring financing applies to firms facing financial challenges but still possessing viable assets and future potential. It is not limited to bankruptcy situations, though many restructurings occur under formal legal protection. The core goal is to secure temporary capital to maintain operations while rebuilding the company.
Why Assets Matter in a Restructuring
Restructuring lenders evaluate a company’s assets to determine whether continued financing is justified. Strong collateral and a clear path to recovery increase approval odds. Asset value often dictates loan size, structure, and pricing.
Specialized Nature of Restructuring Finance
Restructuring finance is a niche segment within commercial lending. These lenders understand distressed situations and know how to secure and monitor assets. Their expertise reduces risk and supports the company’s reorganization strategy.
The Goal of Restructuring: A Stronger Company
The objective of any restructuring is a successful emergence with lower debt and improved performance. Businesses aim to access new financing while resolving past obligations. Specialized lenders—banks and independent finance firms—play a key role in this transition.
Priority and Pricing in Restructuring Loans
Restructuring lenders typically receive priority security on the company’s assets. This enhanced protection compensates for elevated risk. Interest rates are usually higher than traditional bank financing due to the distressed nature of the situation.
Advantages for Restructuring Lenders
Lenders may be oversecured when asset values exceed the loan amount. Large restructurings often require multiple lenders who pool capital to provide temporary working capital. Some lenders also seek future equity or ownership positions.
Common advantages for lenders include:
Priority ranking over existing creditors
Strong collateral coverage
Opportunities for long-term investment or equity participation
Higher yields than conventional commercial loans
Industry Differences and Lender Expertise
Every industry has unique valuation, risk, and restructuring characteristics. Experienced restructuring lenders understand sector-specific challenges. Their knowledge improves recovery outcomes and increases the likelihood of refinancing.
Maintaining Operations During Restructuring
The ability to continue operating is critical to a successful restructuring. Temporary financing supports payroll, suppliers, and customer commitments. Business continuity significantly improves the company’s chance of emerging stronger and securing new long-term financing.
CASE STUDY: RESTRUCTURING FINANCING SUCCESS – ABC COMPANY
FROM THE 7 PARK AVENUE FINANCIAL CLIENT FILES
Challenge:
ABC Company, a mid-sized industrial parts manufacturer, faced severe financial stress driven by slow-paying customers, underperforming expansion, and heavy legacy equipment debt. The firm was 90 days behind on payables, in bank covenant violation, and had its operating line recalled—despite strong 38% margins and competitive manufacturing strengths.
Solution:
7 Park Avenue Financial secured a restructuring package that included an $1.2M ABL facility, $800K equipment sale-leaseback, and a $400K working-capital term loan. The plan added a part-time CRO, negotiated a 35% reduction in aged payables, and extended remaining creditor terms over 24 months.
Results:
Within six months, ABC generated positive cash flow and cut monthly debt service by 42%. Vendor relationships normalized, working-capital cycles improved by 28 days, and all old payables were cleared within 18 months. After 30 months, the company refinanced back into traditional bank financing, with 24 months of profitability and $450K in cash reserves—emerging leaner, stable, and positioned for sustained growth.
Key Takeaways
Restructuring financing supports companies during financial distress while preserving operations.
Asset strength is a major factor in securing restructuring loans.
Restructuring finance is a specialized niche requiring expert lenders.
Lenders often receive priority security and higher yields due to risk.
Continuity of operations is essential for a successful turnaround.
Industry-specific expertise increases the odds of refinancing and recovery.
Conclusion
Restructuring financing represents one of the most misunderstood yet potentially transformative capital solutions available to Canadian businesses experiencing financial difficulty, offering a path forward when conventional lenders see only risk.
If your business requires restructuring financing or needs to overhaul existing debt, call 7 Park Avenue Financial, a trusted and experienced Canadian business financing advisor.
The right guidance improves outcomes and ensures access to specialized restructuring capital. Strong advisory support can make the difference between survival and failure.
FAQ - RESTRUCTURING FINANCE
Q: What cash-flow improvements can businesses expect from restructuring financing?
A: Many companies see cash-flow relief within the first month as debt payments are consolidated and creditor pressure eases. Lower monthly debt service, extended terms, and added working capital typically deliver a 20–40% improvement in operating cash flow, depending on the structure negotiated.
Q: How does restructuring financing help maintain supplier and customer relationships?
A: It provides working capital to stay current with key vendors and restore normal payment terms. Securing financing also signals stability to customers, reducing concerns about delivery, service, or warranty issues. Clearing aged payables helps preserve essential business relationships.
Q: Can restructuring financing support growth while fixing financial problems?
A: Yes. If growth investments clearly support the turnaround, lenders can include capital for equipment, technology, or expansion. The key is demonstrating that the investment boosts revenue or reduces costs and accelerates the return to profitability.
Q: What protection does restructuring financing offer against creditor legal actions?
A: In formal CCAA or BIA proposal processes, court-ordered stays halt creditor actions. Even in out-of-court workouts, a senior secured restructuring lender often encourages creditor cooperation, reducing collection pressures and allowing time to execute the turnaround.
Q: How does restructuring financing improve access to future traditional loans?
A: A successful restructuring strengthens the balance sheet, resolves legacy issues, and builds a track record under a cleaner financial structure. Most businesses can return to traditional lending within 2–4 years, often accessing better financing terms than before the distress period.
STATISTICS ON RESTRUCTURING FINANCING
Approximately 60-70% of businesses that secure restructuring financing successfully complete their turnaround and return to profitability within 3 years (Canadian Association of Insolvency and Restructuring Professionals)
The Canadian restructuring financing market provides approximately $2-3 billion annually in capital to distressed businesses across various sectors
Companies utilizing professional restructuring financing advisors achieve 40% better outcomes compared to those attempting to negotiate independently (Turnaround Management Association)
Asset-based lending, a common component of restructuring financing, can advance 75-85% against eligible accounts receivable and 50-65% against inventory for qualified businesses
The average restructuring financing arrangement takes 45-90 days to complete, compared to 6-12 months for formal CCAA proceedings
Businesses in manufacturing and distribution sectors represent approximately 35% of restructuring financing applications in Canada
Interest rates for restructuring financing typically range from 8-18% annually, compared to 3-6% for conventional business loans
Approximately 80% of businesses seeking restructuring financing have been declined by at least two traditional lenders
The survival rate for businesses using restructuring financing is approximately 65%, compared to 25% for businesses that delay addressing financial distress
Working capital improvements of 25-40% are commonly achieved within the first 6 months of implementing restructuring financing
CITATIONS
Canadian Association of Insolvency and Restructuring Professionals. "2024 Insolvency Statistics and Trends." CAIRP Annual Report (2024). https://www.cairp.ca
Office of the Superintendent of Bankruptcy Canada. "Corporate Insolvency Statistics." Innovation, Science and Economic Development Canada (2024). https://www.ic.gc.ca/eic/site/bsf-osb.nsf/eng/home
Turnaround Management Association. "Corporate Renewal and Restructuring: Best Practices." TMA Journal of Corporate Renewal 36, no. 2 (2023): 12-28. https://www.turnaround.org
Deloitte Canada. "Restructuring and Turnaround Services: Industry Perspectives." Deloitte Financial Advisory (2024). https://www.deloitte.com/ca
Medium/Stan Prokop/ 7Park Avenue Financial."Restructuring Capital And Business Turnaround Financing" . https://medium.com/@stanprokop/restructuring-capital-and-business-turnaround-financing-08f6dcabb84a
Bank of Canada. "Credit Conditions and Business Financing." Financial System Review (December 2023). https://www.bankofcanada.ca
PricewaterhouseCoopers. "Distressed Debt Markets in Canada." PwC Financial Services Report (2024). https://www.pwc.com/ca
Medium / 7Park Avenue Financial ."Turnaround Financing and Business Refinance Solutions for Canadian Companies" . https://medium.com/@stanprokop/turnaround-financing-and-business-refinance-solutions-for-canadian-companies-65dd5ce0f120
McCarthy Tétrault LLP. "Restructuring and Insolvency Law in Canada." Canadian Legal Guide (2023). https://www.mccarthy.ca
BMO Capital Markets. "Special Situations Financing: Market Overview." BMO Financial Analysis (2023). https://www.bmo.com
Fraser Milner Casgrain LLP. "CCAA and DIP Financing Trends." FMC Restructuring Insights (2024). https://www.fmc-law.com
Canadian Federation of Independent Business. "Small Business Financing Challenges and Solutions." CFIB Research Report (2023). https://www.cfib-fcei.ca
7 Park Avenue Financial ." Debt Restructuring Companies: Solutions for Canadian Business Recovery" .https://www.7parkavenuefinancial.com/business-debt-restructuring-loan-abl-financing.html
