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What to do if a hedge fund comes looking for your debt

Date: Monday, May 16, 2011
Author: Donata Huggins, City A.M.

WITH bank loans tricky for small businesses to get their hands on, staying in the black is becoming more difficult. While this is terribly stressful for entrepreneurs, hedge fund managers are rubbing their hands together with glee. And if the stereotype is anything to go by those nasty chaps are determined to cut themselves a lucrative deal at your expense. But donít panic. Forget the horror stories you hear about managers phoning in the middle of the night whispering the fear of God into you. There are ways to make sure you are get the best deal for you and your business. We spoke to top insolvency lawyer Volker Beissenhirtz of Schultze and Braun about what do when the hedge funds come calling.

And donít forget: you can pick up the industryís top tips on raising capital at the City A.M. and Entrepreneurs World conference on 22 June. Visit www.cityam-helix.com or see advertisement below.

● Be cautious, but open minded. If properly negotiated and properly looked over by your lawyers, restructuring your debt with a hedge fund can be good for you and your business.

● Most of the time the people who work for hedge funds are very professional, but I have seen some things that would turn your hair white. Donít let scare tactics spook you and be wary Ė donít trust everything youíre told.

● Have a pro-active stance Ė approach the hedge funds yourself. But be sure you get the right fund. There are lots of different types and you should aim to get one that specialises in your sector.

● Donít expect the process to be speedy. Restructuring takes months, not hours. Be sure to get out of the office and maintain your work-life balance while this is going on.