Business Recovery Plan: Structure, Contents and Credibility
A recovery plan is the document a lender, a court appointed expert or a new investor reads before deciding whether the company deserves another year. Most are rejected for the same reason: assumptions nobody outside the company believes.
The components, in the order they are read
- Current position: cash, debt, order book, and how the company got here in three honest paragraphs
- The thirteen week cash forecast and the covenant or payment position it implies
- The operating actions, each with an owner, a date and a quantified effect
- The financial plan, monthly for year one and quarterly thereafter
- The debt treatment being requested, stated explicitly
- Sensitivities: what happens if revenue lands ten and twenty percent below plan
Why plans get rejected
Not because the numbers are bad, but because the recovery is loaded into the back half. A plan showing flat performance for two quarters and then a sharp return to margin is a hope, not a plan. The credible version shows the hardest actions in the first ninety days, with some of them already executed by the time the document is submitted.
Evidence, not intention
Who signs for it
A plan without a name attached is a forecast. Lenders want to know who is accountable for delivery and whether that person has done it before. This is one of the reasons boards appoint an interim executive at the point of writing the plan rather than after it is approved: the plan and the person delivering it are assessed together.
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