Jon Skjørshammer is a leading authority in Norway on restructuring and insolvency. He works with local and international clients in financial restructurings, debt negotiations, and bankruptcies, providing counsel to creditors, shareholders, investors, management, and boards of directors. He has served as both advisor and publicly appointed chairman of debt negotiation committees and as the bankruptcy trustee in many of Norway’s largest and most complex cases.

He started his career as an associate at a law firm specialising in bankruptcies where he gained extensive experience in the field. In 1990, he joined Selmer AS, where he built up their insolvency department. He stayed there for 26 years, dividing his time between insolvency and restructuring, developing a strong interest in advisory roles and helping companies in distressed situations. Over the years, he has been involved in major cases and served as an advisor to boards of directors. In the 1990s economic crisis in Norway, many banks were shut down, and he worked a lot with closing banks, managing unpaid loans, and selling off assets.

Alongside, he engaged in business law and advisory services. Today he is a partner in a smaller boutique firm, Langseth Advokatfirma DA, specializing in insolvency.

Can you explain the process of a restructuring?

“The process of restructuring begins with facing the insolvency dilemma. This involves making critical decisions on which obligations should be prioritised and formulating a cash plan for the day-to-day operations. The initial focus is on assessing the cash situation to determine if there are sufficient funds to meet the company’s obligations. If the cash is insufficient, it is essential to identify the underlying reasons and work closely with the CFO and management team to address these issues.

Building trust is a crucial step, especially when dealing with clients who have non-paying customers. It is vital to establish a rapport with these customers and communicate clearly that the intention is to assist them rather than shutting down their business. Honest and transparent communication helps in gaining their cooperation.

The restructuring approach involves a deep understanding of the business fundamentals and the mindset of the people involved. This often requires visiting and analysing all aspects of the operations. For instance, in cases involving restaurants or retail businesses, it might mean reducing and consolidating locations to achieve significant savings and streamline operations. By thoroughly examining the situation and implementing necessary changes, the restructuring process aims to stabilise the company and set it on a path to recovery.”

What is the most important part during a restructuring?

“The human element is very important. A restructuring is heavily people-oriented, often starting with demotivated teams. You have to bring in new energy, ideas, and hope. You also have to find accurate information, as the initial information from distressed companies is often skewed, so you need to spend time with the organisation to uncover the real situation. Find supportive creditors to lead the way, this makes other creditors more willing to also negotiate. Another important step is to make sure that you have a good team dynamic. Start with a small but capable team and add more members when needed, relying on internal competencies when possible. Cash management is essential to maintain during the restructuring to drive turnaround efforts. If the cash is insufficient and the situation is unsalvageable, bankruptcy may be necessary, but viable business activities can often be restarted under a new legal entity.

A turnaround requires rational and unemotional decision making. This is one of the reasons why it is a good idea to bring in an external expert who can bring the necessary expertise and objectivity. The Executive Interim Manager needs to be aware of and understand the stakeholder’s agenda, such as shareholder interests and how they affect efforts. Interims often navigate this better than an internal resource. An interim also needs to build trust by asking questions without being accusatory.”

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