Insights – COVID-19: Navigating a crisis

The impact of the global coronavirus (COVID-19) pandemic is on an unprecedented scale. We live in uncertain times and the current economic and social change will be felt long after COVID-19 has been contained. Corporates of all sizes and in all industries will be impacted. Corporates in certain industries will rebound quicker than others (likely with the support of government). Corporates in other industries may face permanent change and may never be the same as before. We have identified several key steps that corporates can immediately take to address the day to day operating challenges and availability of liquidity to get through these unprecedented times.


Cash is king – Survive the short term

  • Cash should be the main focus. Accounting profit and loss is secondary

  • Strict controls over cash to ensure only essential payments are made

  • Liquidity management using a robust short-term cash flow forecasting tool to quantify near term liquidity needs and any potential funding gaps. Regularly track and re-evaluate base assumptions as conditions change

  • Deep dive to validate sources (receivables and availability of credit facilities) and uses of cash (operational and financial)

  • Cost take out plan to conserve cash (temporary or permanent measures)

Operational streamlining

  • Operational streamlining and cost reduction plan to restore EBITDA

  • Stakeholder communication plan

Covenant headroom

  • Review loan and bond agreements

  • Scenario analysis to evaluate headroom over covenants taking into consideration the challenging trading environment

Raising new capital

  • Alternative capital providers with “dry powder” with appetite to provide corporates with “relief” capital to address short-term working capital needs, pay down or refinance banks

  • Evaluate strategic equity providers

Contingency planning

  • Situations involving higher leverage and/or shorter time horizons may require a reset of the balance sheet or wider capital structure solution. Directors to be aware of duties and responsibilities

  • Resetting using a Singapore scheme of arrangement offers several benefits:

    • Moratorium: 30-day automatic moratorium from legal and/or enforcement action upon filing. Debtor company may apply to have moratorium extended. Provides essential room and space for company to develop a plan

    • Super priority rescue financing: Ability for debtor company to access new money with priority over secured or unsecured creditors. Please click here for further information on super priority rescue financing in Singapore

    • Other benefits: Cross class cram-down and pre-pack schemes of arrangement to accelerate the scheme process

David Chew61-90