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From Uncertainty to Disruption

A year ago, uncertainty was the pervasive concern for a lot of people across our industry. That uncertainty covered a number of areas, both economic and political, on our shores and others. Twelve months ago the outcome of the U.S. election wasn’t clear, the risks arising from Brexit were unknown, and tepid growth prospects tempered optimism in most parts of the economy. 

Fast-forward 12 months, and disruption has featured even more prominently. Rapid and dynamic policy changes since the 2016 election have brought a renewed sense of economic optimism and have buoyed the markets, at least in the U.S. But those changes have also challenged the economic direction of the previous administration—changing opportunities for many—and upset previous norms of international trade. 

While there is optimism arising from this disruption, many are waiting for the other shoe to drop. Global growth expectations from the Organization for Economic Cooperation and Development (OECD) have improved but remain tempered by financial risk, policy uncertainty in some countries, and weak wage growth. U.S. domestic growth has shown signs of improvement in line with the Fed’s aims, albeit in a “Goldilocks economy”— one that is neither too hot nor too cold. From the renegotiation of the North American Free Trade Agreement (NAFTA) to evolving U.S-China trade discussions to the negotiation of the U.K.’s exit from the European Union, there’s only more disruption and uncertainty to come. 

This edition of JCR includes a range of perspectives from professionals working through this climate of uncertainty and disruption, with lessons emanating from economic changes, legal decisions, and practical experience.

Stephen Mullowney and I review lessons in resilience that Canadian and global mining companies have provided over the past several years. We’ve seen signs of recovery and cautious optimism in the sector over the past few months, following several years of low commodity prices, depressed valuations, and limited financing options. Concerted cost-cutting efforts and prudent decisions on the use of funds generated have put many miners on great footing for the next cycle.

Evan Stitt of Gowling WLG examines the outlook for the solar power sector, where companies are still seeing challenges despite strong global prospects for growth. Building from observations in the SunEdison matter, Stitt outlines key issues affecting both supply and demand for manufacturers, along with the headwinds they face from future pricing challenges and current public policy decisions.

Ana Alfonso and Weston Eguchi of Willkie Farr & Gallagher comment on the evolution of reserve-based lending for oil and gas companies coming out of the recent downturn. There’s been renewed interest in this lending as E&P companies have delevered and prices have stabilized somewhat, offering opportunity for market players to continue their turnaround. That said, the terms of this lending have changed as new lenders have moved into the space, and borrows should take heed.

Ryan Davies and Douglas Huey of McKinsey share their thoughts on the critical role of CFOs in the performance improvement process. They illustrate that setting financial baselines and targets isn’t enough—the finance function can play a much broader role in providing analysis and insight to business managers, coaching teams to focus their priorities, and modelling behaviors to effectively lead performance. It’s a good reminder that turnarounds require more than business plans and savvy negotiation for success—they need strong organizational support for key operational changes.

Matthew Lunn and Justin Rucki of Young Conaway Stargatt & Taylor address evolving case law concerning distressed limited liability companies (LLCs) in Delaware, including the recent Trusa case. The decision reinforces the need for contractual language to give creditors the ability to pursue derivative actions and gives practitioners more practical guidance on the enforceability of such rights.

Brian Pawluck of BKP Advisors offers practical insights about potentially troubled construction companies, garnered from his experience in the real estate and construction sector. In many respects, Pawluck highlights the value in having a granular understanding of a builder’s operations to spot challenges before they become much bigger issues. 

Mica Arlette

Mica Arlette


Mica Arlette is a partner with PwC’s Corporate Advisory and Restructuring practice, based in Toronto. He’s worked with clients around the world to develop and implement restructuring and turnaround plans that preserve value, mitigate risk, and provide effective and practical solutions. His recent projects have included both formal and informal restructuring processes involving cross-border and domestic clients in engineering and manufacturing, oil and gas, consumer goods, and financial services. Arlette is a CPA and a Chartered Insolvency and Restructuring Professional.

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