By Stanley W. Mastil, CFF, CPA, Managing Director

When a business hits turbulent waters, a Chief Restructuring Officer (CRO) can hold the lifeline that guides it back to safety. But what exactly should you look for when bringing a CRO on board? Based on our decades of experience, here are some of the key characteristics of strong CRO:

People Skills

Restructuring often brings about a whirlwind of emotions. Employees with decades of experience may face uncertainty and even unemployment. A skilled CRO must have exceptional people skills to understand, empathize, and effectively manage these emotions within the workplace. Conflict resolution skills and emotional intelligence are essential for navigating difficult conversations, establishing momentum, and maintaining morale during challenging times.

Key Attributes to Look For:

• Leadership: Competent, confident vision to define the solution, build consensus, and lead from both the front and the rear.
• Communication: Clear, transparent, and timely communication to all stakeholders and, most importantly, the ability to meet stakeholders where they stand and communicate in a common language of facts and economic reality.
• Empathy: Ability to understand and share the feelings of others.
• Conflict Resolution: Expertise in resolving disputes and finding common ground in situations with no easy answer, especially when win-win solutions aren’t possible.

Understanding of Restructuring Tools and the Courts

Your CRO needs to have a solid grasp of the restructuring tools available to help turnaround a struggling business. While your CRO isn’t going to be a bankruptcy attorney, they should have a strong grasp of the bankruptcy code and federal and state court restructuring schemes, and any international aspects that might apply to the troubled company. This knowledge will allow them to make informed decisions and utilize the right strategies to keep your business afloat, and make the troubled company a more effective client to its legal advisors.

Key Attributes to Look For:

• Technical Skills: Ability to create and manage budgets, cash flows and other financial metrics.
• Basic Legal Knowledge: Familiarity with bankruptcy codes and the legal implications of restructuring decisions and claims reconciliation.
• Strategic Thinking: Ability to work closely with legal counsel to devise strategies based on applicable legal frameworks.
• Resourcefulness: Knowing when and how to leverage various restructuring tools effectively.

Ability to Act Quickly and Make Hard Decisions

Speed and decisiveness are critical in a restructuring scenario. The line between turnaround and liquidation can be razor-thin, and businesses in restructuring are inherently fragile. A great CRO has the skills and experience to act swiftly and make tough decisions that could mean the difference between survival and dissolution.

Key Attributes to Look For:

• Decisiveness: Ability to make quick, firm decisions. A skilled CRO knows that even not making a decision is, by default, making a decision.
• Experience: Proven track record of managing turnarounds successfully.
• Crisis Management: Skills to handle high-pressure situations with poise and clarity.
• Certification: the Certified Turnaround Professional designation is only awarded after a candidate proves documented experience, receives recommendations from experienced industry colleagues, and successfully passes a comprehensive exam covering management principles, turnaround topics, insolvency and bankruptcy, and accounting.

Choosing the right CRO can be the pivotal decision that determines your business’s future. Prioritize people skills, a solid understanding of restructuring tools and the bankruptcy code, and the ability to act quickly and decisively. These qualities will help ensure that your CRO can effectively lead your company through challenging times.

At Gavin/Solmonese, our approach to Bankruptcy and Fiduciary Services combines deep knowledge with hands-on experience to provide the direction businesses need to steer through periods of financial uncertainty. We are regularly appointed as a CRO, liquidating trustee, assignee, or examiner in court-supervised cases. We manage turnarounds, reorganization plans, liquidations, and asset sales. Need help? Let us know – we’re ready to go.