The credit crisis isn’t the only crunch distressed companies face. As corporate restructuring timelines accelerate, debtors, along with their professionals and service providers, tackle a time crunch to accomplish in weeks what normally takes place over several months, or even years, in a traditional Chapter 11 corporate restructuring.

Corporate restructuring timelines have been accelerated due to factors such as tight credit and lending conditions, as well as by reduced time frames imposed by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Bankruptcy professionals must approach the Chapter 11 process even more strategically to keep pace with condensed timelines and to maximize the recovery for stakeholders. As a result, debtors find themselves saving significant time and costs associated with the bankruptcy process.

It was once not unusual to see the Chapter 11 process unfold over many years, reaching key milestones along the process until a company emerged from Chapter 11. Today we see more accelerated bankruptcies. Recently, we’ve seen examples such as a debtor who filed and emerged from Chapter 11 within a record 32 hours and a debtor who executed an equity-sponsored rights offering within months. We’ve also seen quick asset sales just days after a Chapter 11 filing as well as a rising number of prepackaged bankruptcies. According to BankruptyData.com, 12 prepacks have been filed in 2008; only four filed in all of 2007.

While debtors can benefit strategically from an accelerated bankruptcy, they also face increased procedural challenges. As an example, in the case of Bally Total Fitness Holding Corp., which filed a prepack and emerged in 51 days, the professionals and claims agent closely collaborated throughout this expedited time frame to ensure timely notice within the prepack requirements. Movie Gallery Inc., another example of a fast-paced case, quickly organized the team to assess nonperforming lease agreements with more than 4,000 retail locations, achieving an executed reorganization plan within seven months.

In addition, tight credit and lending conditions have made it much more difficult for companies today to secure debtor-in-possession financing and have encouraged debtors to move swiftly through the process. Furthermore, the bankuptcy measure of 2005 has also brought on even greater procedural challenges such as information dissemination to official committees as well as a reduced time frame to accept or reject lease agreements.

Accelerated bankruptcy timelines require sophisticated planning and coordination to ensure success. Companies and their professionals should follow some general principles to more easily navigate through increasingly compressed time frames:

Be smart. Corporate restructuring is both an art and a science. Make sure you enlist help from experienced restructuring specialists. From the lawyers to the claims agent, these specialists should have experience in handling the complexities of accelerated bankruptcy timelines.

Be quick. From preplanning to emergence, companies can achieve their goals fairly quickly with adequate strategy and agile execution.

Be prepared. Key company information should be accessible to help expedite the process and easily locate required records. Data needed during the process can include financial statements, vendor listings, employee-retiree listings, contracts and other valuable information.

Be transparent. Develop a strategic communications strategy to disclose progress to relevant constituencies during the restructuring process–from employees and vendors to financial institutions and the media. It is critical you know what to say, when and how to say it.

Be sensitive. When dealing with financial matters of this scale, emotions run rampant. Be sensitive to the needs of stakeholders, and provide reassurance that their matter is one of significance and is being addressed.

Companies, professionals and their service providers are under much scrutiny to accelerate the corporate restructuring process to maximize stakeholder recoveries and reduce the cost of bankruptcy. Now more than ever, they must approach Chapter 11 with as much advance planning as possible to ensure a successful emergence.

Jonathan A. Carson is a former restructuring attorney and president and co-founder of Kurtzman Carson Consultants LLC.

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