For most troubled companies, entering into formal insolvency procedures is a course of last resort only to be pursued when informal strategies have been exhausted. These informal strategies may, as discussed above, take a variety of forms, and different modes of action are reviewed in this chapter. Before looking at particular devices, however, it is worth considering the processes that lead up to the selection of an informal rescue strategy.

Assessing the prospects

There are seldom clearly identifiable times in corporate life when rescue steps are required. As noted in chapter 4, the financial state of a company can be thought of as a portrait painted by accountants or company directors, a picture that may reflect a variety of ‘calculative technologies’, disciplinary perspectives and even sets of negotiations. Different actors, moreover, may play key roles in setting up rescues. Often it is a firm's bank that initiates turnaround steps. When insolvency professionals are brought into a firm to carry out turnaround work such a step is instigated by a secured lender in 60 per cent of cases. A firm's own directors may institute actions. They may call in firms of accountants to act as company doctors or specialist corporate troubleshooters may be consulted. Directors are responsible for appointing turnaround IPs in a fifth of cases. There are particular dangers to be borne in mind by directors when rescue measures are under consideration. They must look to their potential legal liabilities and must act consistently with their obligations.