Emilio B. Imbriglio
President and Chief Executive Officer | FCPA, FCA, MBA, CFE, ICD.D.

Your business has got the wind in its sails and now you’re wondering what the next step in your growth should be. What path should you take to move in the right direction?

If you’re thinking about an acquisition, want to develop markets or are looking for a partner, ask the right questions before taking action. Emilio B. Imbriglio, Raymond Chabot Grant Thornton President and CEO, shares his expertise.

 

08 Jun 2018  |  Written by :

Mr. Imbriglio is partner and the President & CEO of Raymond Chabot Grant Thornton. He is in charge...

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Are your US sales effected? Your Sales and Use Tax compliance obligations may be greatly impacted by a Supreme Court ruling on the horizon.

Online Tax Strategies−June 2018

We are eagerly awaiting a ruling that may reshape Sales and Use Tax compliance for Canadian businesses selling into the United States.

The present state of affairs

Presently, states cannot force a business to register for nor collect sales and use tax if the business has no physical presence in the state (for example: a place of business, inventory, equipment, sales staff, independent agents, contractors, technicians). States may provide for a minimum threshold of sales for registering; however, they may not force a business to register based solely on a business’ volume of sales if they do not have any physical presence.

These precedents were established long before the prominence of internet sales, when the closest equivalent was catalogue sales (see National Bellas Hess v. Department of Revenue, 386 U.S. 753 (1967), Quill Corp. v. North Dakota, 504 U.S. 298 (1992))

However, recently states have been frustrated with the loss of tax revenue and have been challenging these precedents on the basis that they are outdated and were formulated at a time that does not square adequately with today’s economic reality.

In South Dakota v. Wayfair, inc., the Supreme Court of the United States will be in a position to change the rules, to allow states to require businesses to register based solely on the volume of sales.

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Adviser alert – May 2018

The Grant Thornton International IFRS team has published IFRS Viewpoint – Accounting for cryptocurrencies – the basics.

The IFRS Viewpoint series provides insights on applying IFRS in challenging situations. Each edition will focus on an area where the standards have proved difficult to apply or lack guidance.

This edition provides guidance on some of the basic issues encountered in accounting for cryptocurrencies, focusing on the accounting for the holder. A future IFRS Viewpoint will explore other more complex issues, such as those relating specifically to cryptocurrency miners.

The issue

The popularity of cryptocurrencies has soared in recent years, yet they do not fit easily within IFRS’ financial reporting structure. For example, an approach of accounting for holdings of cryptocurrencies at fair value through profit or loss may seem intuitive but is incompatible with the requirements of IFRS in most circumstances. This IFRS Viewpoint explores the acceptable methods of accounting for holdings in cryptocurrencies while touching upon other issues that may be encountered.

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Jean Chiasson
Partner | CPA, CA, CIRP, LIT | Recovery and reorganization

The “Central and Critical” Role of the Chartered Insolvency and Restructuring Professional (CIRP) In the recovery of a struggling business

Personally, I think our professional lives are exciting because of the challenges that a Chartered Insolvency and Restructuring Professional (CIRP) faces in the financial rehabilitation of individuals and companies. As well, our profession is constantly evolving with changes in insolvency regulations and with the rhythm of economic cycles.

Canada has almost 1,000 active CIRPs (almost all of them are also Licensed Insolvency Trustees) and about 350 articling associates. Many of us practice exclusively in one sector: either business bankruptcies or consumer bankruptcies.

In this regard, the portrait of the statutory component of our practice (mainly files under the Bankruptcy and Insolvency Act) has changed considerably over the last 10 years (in the 2007–2016 period).

Consumer insolvency files saw a 25% increase in 10 years and are keeping our members and our articling associates busier than ever.

On the other hand, statutory business files fell by 50% (54% fewer bankruptcies and 27% fewer proposals). It is interesting to observe that the number of consumer files had a sudden and significant increase following the economic recession of 2008–2009 and during the flurry of legislative changes at the same time, but that the “steady and consistent” decline in the number of statutory business files did not seem to be affected by this period of economic downturn, nor by other important economic factors that Canada has experienced since 2010, such as a slowdown in the resource sector and strong variation in the exchange rate.

Canadian SME’s recovery

My practice — almost 25 years of business recovery (rarely in a statutory context) — has allowed me to note specific elements that help to explain the marked and steady decline in statutory files for small and medium-sized Canadian enterprises (the following list is not exhaustive):

  • Businesses have greatly improved their finance function. Both the competencies of chief financial officers and the management tools have greatly evolved — efficient accounting systems, relevant information management and budget planning;
  • Financial institutions (particularly short-term secured lenders) have improved their risk management and their methods of follow-up and intervention;
  • The use of forms of electronic payment (including external payroll services) makes it more difficult to “unduly and covertly” increase arrears with suppliers and government agencies; and
  • The costs of statutory restructuring are significant.

All of these elements are leading entrepreneurs and their financial partners to react “more quickly” in the context of a business’s deteriorating profitability and financial situation. As well, by removing up to six months from the process of rationalizing expenses, abandoning an unprofitable product or service, or closing a division or subsidiary that is running a deficit, a company’s management is often able to avoid bankruptcy or the need for statutory restructuring.

In practice, we note that no matter why or how we were hired (by the company, by a secured lender or by an institutional investor), all the financial partners are “listening” to the analyses and observations of the CIRP.

Involvement of licensed insolvency trustees

Superintendent of Bankruptcy (OSB) statistics do not allow for the measurement of the involvement of licensed insolvency trustees (or CIRPs) in “non-statutory” restructurings of companies in all Canadian regions. Indeed, a company is not going to broadcast that has avoided bankruptcy with the help of a CIRP, except among a very close circle of contacts!

In reality, CIRPs are still being asked by companies or companies’ financial partners to assess a worrying financial situation. In such situations our expertise and our credibility come into play, and this includes:

  • An immediate intervention. This is no small matter: intervention by a CIRP is quick and serious;
  • A relevant analysis of the situation because of the CIRP’s experience and credibility in business and finance and understanding of the foreseeable consequences of a precarious situation;
  • A cash-flow assessment and the development of very short-term projections (12- to 16-week cash projections). This helps short-term secured creditors be patient and participate positively in the recovery process;
  • A recovery plan that takes into account priorities and includes immediate measures and actions; and
  • A clear vision enabled by the preparation of financial forecasts for the coming year, which will make it possible to identify the contributions from the shareholders (or others), to specify the support needs of lenders and to regularly monitor the achievement and evolution of recovery measures in the coming months.

In practice, we note that no matter why or how we were hired (by the company, by a secured lender or by an institutional investor), all the financial partners are “listening” to the analyses and observations of the CIRP, even as they understand that the CIRP’s more specific recommendations will be reserved for his or her client.

Therefore, certain elements are necessary to avoid slippage at the beginning of a CIRP’s intervention:

  • A CIRP’s reputation in his or her community for his or her ability to work as part of a team and to bring about a company’s recovery either with or without statutory restructuring;
  • A pre-established method of communication for all stakeholders while considering the disclosure limits of the CIRP’s mandate;
  • Specified deadlines for the initial analysis period and the follow-up of the company and the CIRP with the financial partners involved; and
  • The involvement “sooner rather than later” of an “extended” group of financial partners to allow a representative to be designated for each partner and for the recovering company’s file to be treated quickly and as a priority when decisions are being made.

No matter the trends for their future “statutory” insolvency files, the CIRPs’ role in Canada in business recoveries will remain predominant and continue to evolve in the years to come.

This article was published in Rebuilding Sucess Magazine, Spring-Summer 2018.

28 May 2018  |  Written by :

Jean Chiasson is a partner at Raymond Chabot Grant Thornton. He is your expert in Recovery and...

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