Interim Chief Financial Officer — Covenant Reset

Finance leadership expected

• Reconcile covenant calculations to underlying accounts, facility definitions and permitted adjustments, with specialist review where interpretation is uncertain.
• Model headroom across seasonality, demand changes, input-cost movements and working-capital swings.
• Build a lender proposal explaining the causes of pressure, corrective actions, requested changes and the information needed to monitor progress.
• Strengthen the monthly close and forecasting process so management can anticipate pressure before a reporting date.

The judgement behind the numbers

The CFO should challenge whether proposed add-backs represent sustainable earnings, whether cash can move where obligations sit and whether a reset merely postpones a larger funding problem. Work with commercial and operating leaders to turn forecast improvements into accountable actions. Present the board with choices and trade-offs, including the cost of additional restrictions or security.

Develop a covenant sensitivity schedule that shows the effect of individual assumptions and combinations of adverse movements. Record the interpretation and data source for each material adjustment so future reporting does not depend on the negotiator’s memory. Any proposed cure, waiver or reset should be evaluated for its timing and continuing obligations with the relevant advisers. The CFO should explain the difference between contractual compliance and genuine debt-service capacity, particularly where a business can satisfy a ratio while still facing a cash shortfall.

Who is qualified

Candidates should have negotiated covenant changes and managed the reporting obligations that followed. They need credible accounting expertise, treasury capability and experience with consumer-demand volatility. An ability to explain technical financing definitions in plain language is essential when aligning lenders, owners and operating managers.

Measures of completion

The result should be a defensible covenant model, a documented compliance process and agreed triggers for corrective action. A successful negotiation should improve predictability and execution capacity, with no reliance on unsupported adjustments or optimistic collection timing.