Distressed situations are disruptive. Not only is the company facing financial difficulties—such as declining cash flows and other financial performance metrics, along with potential defaults under debt documents—stakeholders often have lost faith in the current management's ability to navigate the distress and correct the company's course. It is within these distressed workout situations that chief restructuring officers (CROs) or chief transformation officers act as a critical tool to win friends and influence people both within the organization and among external stakeholders to right the company's course.

A CRO is an agent of change in an organization going through distress, whether financially, operationally, or otherwise. CROs complement existing management as an effective interim member of management and officer of the company who manages and implements the workout, turnaround, and restructuring. In essence, CROs function as a form of interim management and utilize their expertise in operations, finance, distressed situations, and restructuring to implement corrective change in the company.

Although a CRO adds an outside voice, this role is different than an independent director, though a company should also consider appointing an independent director as part of implementing a CRO engagement. An independent director with restructuring experience can serve as an important liaison between a CRO and the board of directors and/or restructuring committee. By ensuring that a CRO reports directly to the board or restructuring committee, a CRO can work effectively to implement turnaround strategies.

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