stakeholders require it. “Once they hire a restructuring professional,
they almost always file [Chapter 11] within a month,” he says.
Keeping Companies Out of Chapter 11
“Very few lenders want their clients in bankruptcy,” he adds. “It’s an
expensive and time-consuming way to reconcile something. They
generally go in because it’s the only way to deal with their problems.”
Snyder says his job is keeping companies out of bankruptcy and
his team is largely successful. Filing bankruptcy, he explains, has also
changed a great deal during his more than 20 years in the business and
the new rules make it more difficult for industries like retail to execute
a restructuring after filing.
‘Everything is more complicated,” he says, but the main source of
that complication is the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005, which totally changed the bankruptcy procedures. Although BABCPA was passed to prevent abuse of Chapter 7
filings, its provisions have spilled over and made Chapter 11 proceedings more complicated, too.
As one national retail chain after another bites the dust, Snyder
contends that the narrow timeframe required by BABCPA has a negative impact on retail survival. This is becoming a familiar refrain of
turnaround professionals and bankruptcy attorneys.
“Look at what happened to Circuit City,” Snyder says, referring
to the electronics/appliance chain that closed in 2009. The company
owed more than $300 million when it filed. “You can’t pay that off. It’s
impossible to reorganize them. We used to have more time to do work
with. We’d cut expenses, change the format and reorganize. We can’t
do that today.
“So some of the challenges have been on the legal side. It’s become
much more difficult to reorganize these companies.”
Healthcare Vulnerable in 2017
Looking ahead to 2017, Snyder sees continued volatility in both the
retail and energy industries. Healthcare, he says, is also vulnerable
because of fluctuating reimbursals as providers and insurers battle it
out under the Affordable Care Act.
“Reimbursal rates can swing pretty dramatically,” Snyder explains.
“There was a big push last year with out-of-network hospitals and
service providers. They were getting much higher reimbursement rates,
and basically insurance companies shut that down. Now rural hospi-
tals and small hospitals are struggling to survive.”
Looking ahead to more turbulence, Snyder has a bit of advice for
companies in distress. “In trying to find a solution, sooner is better.
The sooner you can get somebody in there to fix it, the better off
you’ll be.” abfj
NADINE BONNER is editor of ABF Journal.
In 2001, he and his partners had what he calls “a
falling out.” Looking back, he recalls, “We were basically focusing on capital and turnaround. They focused
more on the turnaround side, and that’s not where I
thought we were going, so I left. But eventually, most of
these partners ended up with me, focusing on middle-market work and capital providers. We all ended up in
the same place eventually.”
Returning to His Roots
After Crossroads, he started Corporation Revitalization
Partners (CRP), which merged with corporate recovery
group, CRG, in 2007.
Snyder sold CRG to global giant Deloitte in 2012
and moved to the large international firm as principal of Deloitte Transactions and Business Analytics
and co-leader of the Deloitte Corporate Restructuring
Group. It was a productive period for Snyder who was
inducted into the American College of Bankruptcy as a
Fellow of the College at a ceremony at the Smithsonian
Institutes in Washington, D.C. in March 2014.
But he felt a strong urge to return to his roots.
“I wanted to get back to middle-market turnaround
work. That’s my passion. I got my group of partners back
together,” Snyder says. They formed CR3 Partnership.
Of the 19 current partners, Snyder says only one has not
worked with him at one of the other starting companies.
Because the company is made up of professionals
with deep experience, Snyder says they can provide
interim management for floundering companies.
Start with Performance Improvement
“We place a lot of senior managers in situations where
companies are underperforming. We have a whole
bench of people that have 25 to 40 years of manage-
ment experience, and we place them in the companies
in distress. We also do performance improvement work.
When you go to fix a company, you first have to fix the
operations, then you do the restructuring of the balance
sheet. If you try to fix the balance sheet first, you lose
the credibility of everybody involved in the turnaround
because you’re not maximizing value.”
“So, that’s why we have these multi-disciplines in
our little group — performance improvement, inner
management and turnaround. We use all of those and
intertwine them. We’re a small group but we provide a
lot of value.”
Snyder notes that companies never call to say they
are in trouble and in danger of failing.
“We’re usually brought in by someone in the capital
structure who has lost faith in the management team
and tells the company they need to hire a CRO. In 30
years, I have never had a company call me and say
they need help and can’t figure it out. By the time we’re
forced into the situation, it’s usually late in the game.”
Do the small companies he works with wait longer
to ask for help than large companies?
“No,” Snyder says. “They all wait until the last
minute.” Even large companies, he adds, don’t call a
turnaround professional until the bondholders or other
“When you go to fix a company, you first have to fix the operations, then you do the restructuring of the balance sheet. If you try to fix the
balance sheet first, you lose the credibility of everybody involved in
the turnaround because you’re not maximizing value.”
— William Snyder