Every company has a unique life cycle. Throughout the life cycle, companies are tracking successes and failures, depending on the various factors that affect their business. Situations such as financial distress , idleness, or bankruptcy represent the fundamental levels of a company's life cycle. The purpose of the paper is to present the financial restructuring of the company in business problems on the example of the Agrokor Group. This paper describes the operations of the Agrokor Group from 2007 to 2017, ie it is divided into business analysis prior to the extraordinary administration and in the procedure of extraordinary administration. The characteristics of Agrokor Group's operations prior to extraordinary administration are: low liquidity and negative working capital over the observed period, extended payment of obligations to suppliers ranging from 110 to 211 days, ie 156 days on average, increased indebtedness and high indebtedness and insolvency in 2016, solid Group's activity ratios , positive profitability by 2015. With the advent of extraordinary administration , inappropriate corporate governance has been identified, and audit results show that accounting irregularities and potential illegal actions have been identified. Claims recognized amounted to HRK 31.04 b illion , while disputed claims amounted to HRK 10.4 b illio n. The Group has a financial arrangement of EUR 1.06 billion with super senior status. In addition, the complex structure of claims is emphasized. Bearing in mind all the above, the Group's financial restructuring is possible with the new corporate structure, the new capital structure, the allocation of financial instruments to stakeholders. Returns to creditors should be defined by the entity's priority model. Group value would be distributed among stakeholders based on their legal rights, ie the model's rank. The value of each claim claimed is determined by the fraction of the total distributable value that it needs to receive. After that, it will determine how many depositary receipts and the exchangeable bonds each creditor receives.
Table of Contents
- 1. Introduction
- 2. Theoretical background and previous research
- 2.1 Financial difficulties
- 2.1.1 Levels and types of business difficulties
- 2.1.2 Causes of financial difficulties
- 2.1.3 Eliminating financial difficulties
- 2.2 Bankruptcy Forecasting Techniques and Models
- 2.2.1 Financial ratios
- 2.2.2 Discriminatory analysis
- 2.2.3 Linear probability model
- 2.2.5 Logit model
- 2.3 Restructuring of companies
- 2.3.1 Restructuring scenarios
- 2.3.2 Participants in the restructuring process
- 2.3.3 Stages of the restructuring process
- 2.3.4 Advantages of corporate restructuring
- 2.3.5 Operational restructuring
- 2.3.6 Financial restructuring
- 2.3.7 Restructuring techniques
- 2.4 Bankruptcy Law
- 2.4.1 The tasks and objectives of bankruptcy law
- 2.4.2 Bankruptcy cost
- 2.4.3 An example of a good bankruptcy law - Singapore
- 2.1 Financial difficulties
- 3. Research description and research results
- 3.1 Bankruptcy Regulation in the Republic of Croatia
- 3.1.1 Bankruptcy Law in the Republic of Croatia
- 3.1.2 Law on the procedure of extraordinary administration in companies of systemic importance for the Republic of Croatia
- 3.2 Basic information and business characteristics of Agrokor Group before the extraordinary management process
- 3.2.1 Structure of Agrokor Group
- 3.2.2 Agrokor Group's performance indicators for the period 2007-2016
- 3.2.3 Agrokor Group business performance analysis based on business prediction model
- 3.3 Introduction of the extraordinary management and misstatement of the Agrokor Group's transactions in the financial statements of the previous period
- 3.4 Agrokor Group's operations in the extraordinary management process
- 3.5 Costs of operations and extraordinary administration
- 3.6 Debt analysis
- 3.6.1 Debt analysis as of 31.12.2016
- 3.6.2 Debt and claims analysis during the Extraordinary Administrative Procedure
- 3.1 Bankruptcy Regulation in the Republic of Croatia
- 4. Discussion
- 4.1 Restructuring of Agrokor Group
- 4.2 A model for determining the order in which subjects are settled
- 4.3 Financial restructuring of Agrokor Group
Objectives and Key Themes
This paper aims to present the financial restructuring of a company facing business problems, using the Agrokor Group as a case study. The analysis covers the period from 2007 to 2017, examining the company's operations before and during extraordinary administration.
- Financial distress and bankruptcy in companies
- Analysis of Agrokor Group's financial performance and indicators
- The role of extraordinary administration in resolving financial difficulties
- Financial restructuring strategies and techniques
- Debt analysis and resolution in complex corporate structures
Chapter Summaries
1. Introduction: This chapter introduces the concept of a company's life cycle, highlighting the stages of establishment, growth, maturity, and financial distress or bankruptcy. It uses the Agrokor Group as an example of a company undergoing extraordinary administration due to systemic importance within the Republic of Croatia. The chapter establishes the paper's objective: to present the financial restructuring of a company in business problems, using Agrokor as a case study.
2. Theoretical background and previous research: This chapter provides a comprehensive theoretical framework for understanding financial difficulties, bankruptcy, and corporate restructuring. It explores various levels and causes of financial distress, examines bankruptcy forecasting techniques and models (including financial ratios, discriminatory analysis, and the logit model), and details the processes, participants, and advantages of corporate restructuring. The chapter also touches upon bankruptcy law, its objectives, costs, and using Singapore as a positive example.
3. Research description and research results: This chapter presents a detailed analysis of the Agrokor Group, starting with an overview of bankruptcy regulations in Croatia. It then delves into the specific case of Agrokor, examining its structure, performance indicators (2007-2016), and business performance analysis using predictive models. The chapter further explores the introduction of extraordinary management, the misstatement of transactions in previous financial statements, and the subsequent operations under extraordinary administration, including a detailed analysis of operational costs and debt.
4. Discussion: This chapter discusses the restructuring of the Agrokor Group, focusing on the development of a model for determining the order in which stakeholder claims should be settled. It provides an in-depth analysis of the financial restructuring process employed, likely including considerations of new corporate and capital structures, allocation of financial instruments, and the distribution of value among stakeholders based on legal rights and claim priority.
Keywords
Financial distress, bankruptcy, financial restructuring, Agrokor Group, extraordinary administration, corporate governance, debt analysis, Croatia, bankruptcy law, stakeholder claims, financial ratios, predictive models.
Frequently Asked Questions: Financial Restructuring of Agrokor Group
What is the main topic of this document?
This document provides a comprehensive analysis of the financial restructuring of the Agrokor Group, a large Croatian company, during its period of extraordinary administration. It examines the company's financial difficulties, the restructuring process, and relevant theoretical frameworks.
What is included in the Table of Contents?
The Table of Contents covers an introduction, a review of the theoretical background and prior research on financial distress, bankruptcy, and corporate restructuring, a detailed description of the research and results focusing on Agrokor, and a discussion of the restructuring process and its implications. The research encompasses various aspects including financial ratios, bankruptcy prediction models, Croatian bankruptcy law, and a detailed analysis of Agrokor's financial state.
What are the key objectives and themes of the study?
The study aims to present the financial restructuring of Agrokor as a case study. Key themes include financial distress and bankruptcy in companies, analysis of Agrokor's financial performance, the role of extraordinary administration, financial restructuring strategies, and debt analysis within complex corporate structures.
What theoretical frameworks are discussed?
The theoretical background covers financial difficulties, bankruptcy forecasting techniques (financial ratios, discriminatory analysis, logit model), corporate restructuring processes, participants, and advantages, and bankruptcy law (including a comparison with Singapore's system).
What aspects of the Agrokor Group are analyzed?
The analysis includes Agrokor's structure, performance indicators (2007-2016), business performance analysis using predictive models, the introduction of extraordinary management, misstated transactions, operations under extraordinary administration, and a detailed debt analysis.
What is the significance of the extraordinary administration process?
The extraordinary administration process is central to the case study. The document examines its introduction, its impact on Agrokor's operations, and its role in resolving the company's financial difficulties.
How is the debt of Agrokor analyzed?
The debt analysis covers the debt as of 31.12.2016 and the evolution of debt and claims during the extraordinary administrative procedure.
What is discussed in the final chapter?
The discussion chapter focuses on Agrokor's restructuring, a model for determining the order of stakeholder claim settlements, and an in-depth analysis of the financial restructuring process, including new corporate and capital structures, financial instrument allocation, and value distribution among stakeholders.
What are the key words associated with this study?
Key words include financial distress, bankruptcy, financial restructuring, Agrokor Group, extraordinary administration, corporate governance, debt analysis, Croatia, bankruptcy law, stakeholder claims, financial ratios, and predictive models.
What is the time period covered by the analysis?
The analysis covers the period from 2007 to 2017.
- Quote paper
- MA Drago Dević (Author), 2018, The Financial Restructuring of a Company in Financial Distress, Munich, GRIN Verlag, https://www.grin.com/document/507541
