What Is A Chief Restructuring Officer (“CRO”)?
A Chief Restructuring Officer (“CRO”) is a company’s senior officer who has been given broad powers to renegotiate and restructure all aspects of a company’s finances to either (1) prepare for or prevent an impending bankruptcy, or (2) restructure a company following a bankruptcy filing. CRO’s almost always have expertise in the company’s particular field and/or industry. The use of CRO’s has increased steadily since the 1990’s. CRO’s are often viewed as a superior alternative to using a trustee in a reorganization bankruptcy, in part because the trustee may not be knowledgeable about the company’s field of business.
Moreover, using a CRO gives the company’s management team and creditors more of say in the company’s operations compared to a trustee. CRO’s sometimes have been compared to “turn around” consultants, although the CRO differs from outside consultants in that he or she is a senior official of the company with attendant fiduciary duties and has executive power. A CRO sometimes will bring aboard a broad-based support organization to assume operational control of the business. The CRO generally will work with attorneys and law firms, but is not required to be, and often is not, an attorney himself or herself.
The CRO reports to the company and its board of directors. Creditors appreciate that the CRO has great power and authority to resolve financial and contractual issues on behalf of the company because the CRO may make executive decisions following a direct meeting with the company’s creditors. Thus, a CRO can significantly expedite the process of resolving a wide range of contractual and liability claims with creditors, and sometimes personnel issues, ultimately saving the company precious time and cash as it seeks to preserve its existence.