FIN.22:4.1 - Establish what must be kept alive, and until when

Begin with the debtor’s immediate payments and the time available to make a different route possible. FIN.2 supplies the dated cash need; FIN.12 supplies binding conditions, affected actions and remedy deadlines. Identify essential operations, people, assets and relationships that would be lost if funding stopped. A valuation of future recoveries is unusable as a survival plan if the debtor cannot reach the date at which they arise.

Keep an immediate stabilization action distinct from the eventual restructuring. A short agreed extension or interim facility may buy time to investigate and negotiate; it does not establish that the business is viable. Include its price, security, consents and fallback if the wider plan fails. An assumption of continued supply or creditor forbearance requires actual grounds. Obtain applicable legal advice about duties, procedure and authority when those determine the available action.

Diagnose the financial mechanism of distress. A viable operation with a concentrated maturity can need a financing change. An operation with persistent cash losses may need operational change, sale or closure as well. A profitable forecast can still be unfinanceable because working capital and maintenance consume the receipts. Use FIN.4 and the actual operating plan to distinguish these cases. Extending principal without repairing a continuing cash deficit simply moves the failure.