KPMG shares best practices for navigating financial distress

16 March 2021 2 min. read
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In a bid to support GCC leaders in financial distress or facing its prospect, experts at KPMG recently hosted a webinar where they discussed a number of restructuring and turnaround best practices. A round-up of the event’s key takeaways.

Welcoming the over 80 attendees, Jamal Fakhro, Managing Partner of KPMG in Bahrain, kicked off the event by setting the context. “Across the region, many companies are struggling to generate revenue, and overcome financial obligations they have committed in the past.”

Fakhro’s comments echo a recent RAND report, which found that the aggregate economic impact of Covid-19 on the Middle East economy is among the most severe globally, in part due to the region’s relatively high dependence on crude oil, which has seen demand nosedive due to the pandemic-induced downturn. In particular family businesses and small and mid-sized businesses are said to be facing the brunt. 

Jamal Fakhro, Anshul Deobhakta, Ali Al Mahroos - KPMG

For some, any form of restructuring will come too little too late, however for most, taking a timely, proactive stance could mean the difference between survival and going bust. “I encourage business owners and leaders to speak to their bankers and creditors now and consider restructuring their liabilities, depending on the size of their operations and loans, to allow for enough time to restructure the payments of their debts,” said Fakhro. 

Expanding on KPMG’s view of the economic impact on Gulf Cooperation Council member states, Anshul Deobhakta, a Director in the firm’s Advisory division, highlighted the key impacts of Covid-19 to businesses over the medium to long term. Not surprisingly, he first and foremost turned to the role of technology.

“Technology now plays a vital role in our life with a drastic shift towards e-commerce and digital payments.” Add to this the emergence of a new type of customer – “more demanding, less loyal and more sustainable” – and the roadmap is clear: “businesses need to re-invent their approach and strategy for the future.” 

While these trends are relevant for any business going forward, those in acute financial distress will need to channel their efforts to undertake “financial, operational and strategic initiatives to manage their cashflow and deal with the decline in revenues.” While doing so, taking a holistic approach is the best way forward.

The webinar concluded with insights from Ali AlMahroos, Corporate Services Lead at KPMG in Bahrain, who outlined the regulatory aspects of restructuring, including discussing recent Covid-19-induced updates to insolvency laws in Bahrain, Qatar, Kuwait and beyond.