Chapter 11 Financial Advisor or Chief Restructuring Officer
/In a Chapter 11 case, counsel handles the law and the financial advisor handles the numbers: the cash budget, the court reports, the projections and the analyses creditors vote on. For many small and mid-sized companies, the financial side is where cases stall.
Do I need a financial advisor for a small business Chapter 11?
Usually, yes, if the company cannot produce a reliable 13-week cash budget, monthly operating reports and plan projections on its own. The court, the U.S. Trustee and lenders rely on those numbers from day one. If the finance team is thin or the books are behind, an advisor keeps the case on schedule.
Signs you need one:
- No one can produce a weekly cash forecast the lender will accept.
- The books are behind, or pre- and post-petition activity is mixed.
- The lender or the U.S. Trustee is asking for reports the team cannot deliver.
- Management is running the business and the case at the same time and doing neither well.
- The plan needs projections and a liquidation analysis that will stand up to objections.
What does a chief restructuring officer do?
A chief restructuring officer (CRO) is an executive brought in to run the restructuring: cash, operations and the case process, alongside or in place of existing management. Lenders often ask for one when they have lost confidence in management. The court must approve the appointment and its terms.
Financial advisor, CRO or interim CFO?
| Role | What it does | Typical trigger |
|---|---|---|
| Financial advisor to the debtor | Prepares the budget, reports, projections and analyses; supports counsel and management | The company needs Chapter 11 financial work done to the court's standard |
| Chief restructuring officer | Leads the restructuring with executive authority | Lenders or the board want an independent officer in charge |
| Interim CFO | Runs the finance function day to day during the case | The CFO has left or the team needs senior leadership |
In a given case, a firm generally serves in only one of these capacities: the U.S. Trustee's protocol for CRO retentions calls this the "one hat" rule (U.S. Trustee). We serve as financial advisor to the debtor or as CRO, depending on what the case needs.
How is a financial advisor hired in Chapter 11?
Professionals the debtor hires must be approved by the court, hold no interest adverse to the estate and be "disinterested" (11 U.S.C. § 327). Counsel files the retention application. A CRO is usually retained by a separate motion under section 363(b), with the same conflict rules applied, that sets the officer's authority.
The creditors' committee, if one is appointed, hires its own financial advisor to review the debtor's numbers for creditors (§ 1103).
What a financial advisor delivers in a case
- First days: the 13-week cash collateral or DIP budget and the numbers for first-day declarations.
- Reporting: monthly operating reports and budget-to-actual reports, built with the company's staff.
- The plan: projections, feasibility and liquidation analyses, and the numbers behind creditor negotiations.
- Sales: valuation support and the financial side of a 363 sale process.
- After confirmation: monitoring plan payments and rebuilding the finance function.
Questions owners ask
Can we hire a financial advisor before filing? Yes, and it helps: the first-day budget is better when the work starts before the petition.
Does the advisor replace our bankruptcy lawyer? No. Counsel handles legal strategy; the advisor handles the numbers. They work together.
Do you work in Subchapter V cases? Yes. We size the scope to the case.
Related: For restructuring counsel · Turnaround & Restructuring
General information, not legal advice.