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Enhance Knowledge
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LLC
Technology Brokerage & Royalty Servicing |
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Business
Communications |
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In Perspective: Pandemic
Company, Bankruptcy & Reorganization Viability |
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Published: July 2, 2020 |
Original Media: This Publication |
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Updated: None |
The cash profile of every pandemic
company can be set in one of two categories: Diminished [Production]
Capacity and Interrupted [Production] Capacity; and as delineated
presently, by portrayals with their cash flow profiles. The two cases
are consequences
of the demand of Social Distancing, company staffs refusing to go to work
for fear of getting infected by co-workers, of
Executive Order of Governmental Bodies for corporations to shutdown
until further notice, and of course, also from the deprivation of
skilled staff by incidental death from the infection. So, the two extreme
Pandemic Company contexts prevailing are the case of actual shutdown resulting in Interrupted
Capacity, and the other case of reduced operations resulting in
Diminished Capacity.
Obviously the Diminished Capacity Pandemic Company represents the collection of
companies still operating but engaged on only essential systems and
available only in performing proffered production. This comes about either because the
system can not be shut down or is sufficiently automated as to be
operational virtually unmanned, or by happenstance the operations have
always not entailed congregating of staff as to warrant a complete
shutdown because of the impossibility of observing Social Distancing.
Whatever the circumstance the cash profile of such company is as shown
in the Fig 1; both the Cash outflow and Cash |
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inflow Profiles rapidly steeply decay to a lower equilibrium state, but not with discontinuity
in either profile. In either case the profile drops to a level reflecting
the
reduced production capacity.
Clearly, the Interrupted Capacity Pandemic Company, as can be
readily surmised, represents the collection of companies that ceased all revenue generating operations. This comes
about most certainly from Governmental Executive Orders for corporations
of the class of non-essential operations to shutdown until further
notice. So then in this case, more specifically, the cash inflow profile
as shown in Fig 2. does not only actually fall below the cash outflow
profile but rather suffers |
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a negative Step Jump or
Discontinuity drop and actually also becomes zero-valued. The Cash
outflow Profile, on the other hand, only drops to a new level. The drop
of the cash outflow profile is due to the shedding of variable costs
with the interruption of operations, the reduced level however is the
sum of the all non-variable costs or fixed costs of the company such as
real estate leasing, as example. Contrasting both profiles with the Cash
Profile conditions that defines Bankruptcy Company at the time of
filing for bankruptcy protection have been extensively developed and
defined in Bankruptcy, Reorganization
and Viability Analysis; the Interrupted Capacity Pandemic Company
profile qualifies as characterizing every Pandemic
Company of the category of Interrupted Capacity is technically a
Bankruptcy Company. However, the Bankruptcy Company of the class of
Interrupted Capacity Pandemic Company is specially unique with respect
to planning a reorganization, because as there does not exist the option of adjusting the
Cash outflow such as to become any lower than
the zero-value Cash inflow, and consequentially generate positive cash flow as to
enable resumption of business operations.
So then, for a pandemic Bankruptcy Company, the resumption of business
operations must be supported on the primary action of infusion of cash
of such amount as creates a Step Jump of the Cash inflow Profile to a
level above the Cash outflow Profile,
and as secondary action of establishing an upgrade context
making the Step Jump cash infusion to be self sustaining by rapid
circulation, in the
sense that the operations receive the revenue generated, in course, of
operation to support the cash inflow level of resumption as to grow from
thereon. Two possible approaches to enabling the resumption of operation
are depicted in Figs 3 and 4, with both cases showing the Step Jump of
the Cash inflow Profile. Needless |
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to state, the Cash outflow management approach differentiates the two
approaches. In Fig 3, the Cash outflow is not managed but rather left as
is at resumption of operation, while in Fig 4, the Cash outflow is
managed in a form of partial Reorganization of the bankruptcy state of
affairs. So the former does not acknowledge bankruptcy while the latter
does. Of course, which option is chosen by the Pandemic company
management likely will depend on the financial state of the company, as
also will the specifics of the implementation.
In any event, satisfying the secondary
action for resumption such that a
Pandemic Company is vested with viability from the onset is the more difficult
of the actions to be undertaken for the
Pandemic Company to viably resume operations.
The complexity of this situation is best reflected by the challenges
inherent in the construction of the
viability
analysis datasets, as shown in Corporation Viability Analytics
discussing the evaluation of business viability. Intrinsic in those
constructions of the datasets are two critical factors: The verification
of the production cost of unit product, The due diligence asserting
the inflow of revenue generated in fulfillment of sales order.
Constructing the viability datasets for a Pandemic Company entails
extensive computations -- an this is true for both the Interrupted
Capacity Pandemic Company and for the Diminished Capacity Pandemic
Company. The fact is that the unit product case is
computed through Supply Chains prevailing, and the revenue is computed
through the Buyer Chains prevailing.
As noted in other posts one potentially
surviving form of the Pandemic Company has the construct dubbed Wholistic Corporation,
which has the advantage of seller end-user products and effected
synergistic conglomerate to circumvent issues of pandemic-disrupted
Supply Chains. In essence though, that tactics for addressing the issue
of disrupted Supply Chain is a form of Reverse Vertical Integration. Inferentially then even the Reverse
Vertical Integration effects would factor
into the computation-intensive construction of the viability datasets. All these considerations,
clearly, suggests that
the required constructions of the datasets, in this context, incorporate
into the analysis the
production engineering management and designs of the company; then, of
course, the expansive repeatedly analysis of expansive designs of
Reverse Vertical Integration requires M&A Adopter
Venture Brokerage in guidance of the alternative designs towards
discovering viability datasets as input to the Viability Analytics. This
singular computational
demand to construct viability datasets of simultaneous verification of
Supply Chains and Buyer Chains to the end of restarting Interrupted Capacity
Pandemic Company embodies special requirement of
constructed strategic viability designs-set for Stability Analytics within the
Viability Analytics such as is performed with
Business Enduring Viability Analytics and which consequentially must
be adopted in performing Viability Analytics ascertaining the Pandemic
Company Viability. |
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