In business, a multiple number of advisors is on hand to assist any company in achieving its goals. For businesses that are having problems with operational or financial performance, that foresee rapidly changing sales channels (like internet), that operate in changing markets (renewal of legislation and/or changing customers’ taste) and that wish to change their financial position (challenged by upcoming private investors) advisors can be called upon. A segment of this group of consultants call themselves ‘turnaround managers’ or ‘corporate restructuring specialists’. What do they do? Although the terms turnaround and turnaround management have no standard definition, scientific and professional literature refers to a number of common features, giving the following general description: turnaround management is the dynamic process of restructuring a company which is in a life-threatening crisis, or, if no decisive action is taken, will find itself at some time in such a situation. The most important characteristics of such a management process aim (i) to prevent imminent discontinuity (i.e. insolvency liquidation), (ii) to foster (sustainable) recovery of the company by taking thorough measures at strategic, operational and/or financial level, as well as (iii) to initiate changes with regard to the company, its legal and organisational structure and the internal processes (production; services) of the company.

Turnaround managers, advising in these matters, act ‘in the shadow of the law’. Their advice will take into account elements of law which will be relevant when their recommendations are acted upon (perhaps requiring no action at all): applicable laws on the dismissal of employees, contractual positions of suppliers, financial positions of lenders, rules on liability of directors. Turnaround managers may limit themselves to advice, but in practice they will be heavily involved in the implementation of the board’s decisions, including negotiations with all stakeholders involved.

Turnaround activities may be a part of the role of insolvency office holders. In England, for instance, when a company has gone into administration, the administrator has wide powers to manage the company, including doing anything necessary or expedient for the management of the affairs, business and property of the company. Although there may be no court involvement whatsoever (e.g. appointment or permission to take certain actions), in England an administrator is an officer of the court which imposes upon him or her a general duty to act in good faith, fairly and honourably while in office. Whereas in the zone close to insolvency, consensual restructuring should preserve more value and would save more jobs, the professional advisor should have specialist skills, both commercial and legal. In Europe, large groups of turnaround advisors are professionally regulated. However, many are not. Using an advisor who is insufficiently trained and who perhaps has other interests in mind, should be prevented from providing an ‘independent’ review of the interests of the company and its stakeholders. It is necessary to sift the wheat from the chaff. There is some good news here. End March 2016, in Madrid, the Council on behalf of INSOL Europe adopted the ‘INSOL Europe Turnaround Wing Guidelines for Restructuring and Turnaround Professionals‘ (known as ‘TW Guidelines’). These non-binding TW Guidelines were prepared by a Leiden Law School team (including Professor Jan Adriaanse and Dr Bernard Santen) in close cooperation with INSOL Europe’s Turnaround Wing chairman Dr Steffen Koch, Insolvenzverwalter, Partner at hermann wienberg wilhelm, Germany. By setting professional and ethical standards for the turnaround profession in Europe, these guidelines aim (i) to provide leadership on turnaround practice in Europe, (ii) to promote out-of-court restructuring rather than liquidation, (iii) to provide the basis for a long-term sustainable future for the business by ascertaining the quality of turnaround professionals, and (iv) to enhance the trust in the profession in the market. The guidelines explicitly target out-of-court turnaround professionals. There are six TW Guidelines. Guideline 1 describes when the TW Guidelines apply, i.e. only in out-of-court assignments. Guideline 2 is on Professional Attitude, Guideline 3 on the Ethical Attitude of the Restructuring and Turnaround Professional (RTP). The essentials on Communication with the Client, Communication with Stakeholders and on Governance are covered by Guidelines 4 – 6. For the rather short history of the project, including internal reports and the TW Guidelines themselves, see http://www.tri-leiden.eu/project/categories/turnaround-wing-project/. I assume that further information will follow on the processes whereby the TW Guidelines will become binding. The TW Guidelines may certainly serve as a good benchmark in the process of the harmonisation of business rescue proceedings in the EU, where the European Commission also aims to ensure that actors involved in the process, such as insolvency practitioners and turnaround advisors, are appropriately regulated in all Member States. This will ensure trust in these professionals when acting in the interests of debtors and creditors alike.