Virtual Data Room for Bankruptcy and Restructuring: A Complete Guide

Navigating and managing corporate bankruptcy calls for secure, well-equipped technology. And virtual data room software offers companies across all sectors the sufficient toolset to approach complex projects confidently.

What Are Bankruptcy and Restructuring Processes?

The economic turbulence of the past few years has driven companies to make uneasy decisions. Some undergo the filing for bankruptcy process. Others completely revise the way they manage business and approach clients’ transactions. 

But the concepts of both bankruptcy and restructuring aren’t new. They have been around as long as the corporate business scene itself. 

  • Bankruptcy definition

Bankruptcy is a legal procedure that takes place when a business is no longer capable of repaying its debts. The bankruptcy filing process implies the evaluation of distressed assets, collecting numerous documents, and collaborating with law firms. The sheer complexity of such procedures can be very challenging, making bankruptcy a worst-case scenario for any company.

Perhaps, the biggest challenge of bankruptcy is managing insolvency projects – finding solutions to repay debt without having sufficient funds. 

Restructuring, on the other hand, is not necessarily negative. Although some businesses restructure due to an acquisition, others do it to better appeal to their customers and establish a more sustainable business model.

  • Restructuring definition

Restructuring is a series of processes aimed at changing the organizational system of businesses. To successfully restructure, companies must undergo several stages, such as strategizing, analysis, and testing. 

The Role of Virtual Data Rooms in Bankruptcy and Restructuring

Virtual data room technology revolutionized the way companies approach complex deal processing. A thoroughly organized data room is an excellent platform to navigate M&A, due diligence, board communications, and more.

Virtual data room software offers solutions to process documents, protect confidential information, share data with all the parties involved, and configure flexible access specifications for authorized users. Additionally, data room users save time and money by transitioning to the digital storage space and remote decision making.

In the case of restructuring, there are five significant challenges that VDR tools help to address.

5 main restructuring challengesVDR solutions
1Coordinating a large number of stakeholders and other partiesSet personalized usage rights for different parties, such as banks, creditors, court-appointed trustees, and lawyers.
Manage the business operations through calibrated or predefined workflows.
Divide projects into milestones.
Assign tasks to the team members.
2Transferring traditionally in-person procedures into the virtual spaceDigitize the communication processes with online chatting, video conferencing, and email services integrations. 
Allow users to upload, access, and documents from different locations.
Transfer the physical document repository to a secure cloud.
3Operating with escalated document volumes and versatile file formatsUtilize due diligence checklists for gathering the required files.
Operate with various formats and editing tools online and offline.
Apply automatic indexing and labeling to all the documents.
Ask the support team to archive closed projects. 
4Complying with strict regulationsAlign documentation security controls with the industry-dictated regulation.
Monitor data room activity via detailed reports and analytics.
5Securing sensitive data Manage who, when, and how can access all the files.
Assign project managers and administrators to take charge of data security.

The Stages of Using a Virtual Data Room for Corporate Restructuring

Data rooms allow businesses to navigate any complex process faster and easier. And when it comes to restructuring projects, virtual data room technology is a must-have at every stage.

1. Strategy

The very first step of the time-consuming and complex restructuring process is to establish why it has to be done in the first place. The decision-makers will seek assistance in evaluating assets, defining the new focus, performing due diligence, and visualizing the upcoming action plan. 

  • VDR advantage. At this stage, a data room will provide the required security to exchange sensitive information and effortlessly collaborate with multiple parties. 

2. Planning

This stage is concentrated on bringing the strategic vision into practice by defining the specific transactions and processes that need to happen. The general goal of restructuring is to increase the profit and improve its position in clients’ eyes. All actions, including communications, budget allocation, and assigning people responsible for project managing, must align with that goal.

  • VDR advantage. A data room allows saving time by centralizing all documents and people in one equipped space. All parties can share sensitive data, work on collective decisions, and overlook their parts of the project.

3. Test implementation

Once the transaction roadmap is outlined, the restructuring business will implement the strategy on a small scale. For smaller companies, this would mean testing out the new format in a single division. And for international enterprises, it typically translates into applying the changes on a regional level.

  • VDR advantage. Companies can use the virtual data room to monitor the test stage and gather insights. At the same time, affected parties will be able to submit their input and suggest improvements.

4. Assessment and analysis

After the initial testing is complete, the company will assess the gathered data to evaluate its alignment with the initial targets. It is imperative that the project manager finds a way to consider and deal with all types of feedback and channel it into a new, updated plan.

  • VDR advantage. Once again, a secure data room is a great solution for gathering and securing information. On top of that, a VDR can automate analytics, presenting the decision-makers with easy-to-apply statistics.

5. Implementation

Once all the restructuring processes have been fine-tuned and tested out, it is time to implement the new approach on the maximum scale. The assigned project managers will stay in their roles to address all the arising challenges and continue introducing strategy improvements until the management releases them.

  • VDR advantage. A data room offers all the necessary instruments for managing and assessing any process. Once the restructuring is complete, it is possible to reorganize the data room space for other projects or general internal management.

At every step of the way, it is crucial to consult with a law firm, an investment bank, and the necessary financial institutions to ensure that the restructuring process aligns with long-term vision and stability.

Virtual Data Room Benefits for Bankruptcy and Restructuring

Below is a brief summary of the bankruptcy and restructuring data room benefits.

Data centralization and security 

Once all the documents are gathered in the data room, it is much easier to operate and monitor them. The administrators can use various document organization tools, such as text search or secure view. Additionally, virtual data rooms allow checking who and when downloaded different files, which gives deal processors more control over the bankruptcy proceedings.

Access control 

Administrative users can control access to the documents on various levels, including a role in the company, specific responsibilities, IP location, etc. As companies typically deal with many third parties during bankruptcy and restructuring transactions, sophisticated access security translates to the overall effectiveness of the virtual data room.

Enhanced communication

Tools like built-in chats, Q&A, and integrated video conferencing make internal communications secure and convenient. All parties can safely collaborate inside the data room, managing the bankruptcy or restructuring processes from any comfortable device and location.

Accelerated due diligence

Virtual data rooms have a proven record of speeding up the due diligence process. The combination of document centralization and transparency allows anyone from employees to bankruptcy attorneys to retrieve the necessary data. 

Reporting and analytics

Data room analysis tools provide access to documents that summarize all the transaction processes, including user activity and progress updates.

How to Select a Virtual Data Room Provider for Bankruptcy and Restructuring

To select the right technology for restructuring, bankruptcy, or any other complex corporate process, your company must evaluate and compare several VDR providers. Consider the following criteria to streamline the comparison process.

Sufficient experience 

Previous experience and expertise in bankruptcy and restructuring guarantee your deal to go smoothly. Make sure to inquire about particularly tricky scenarios such as insolvency or international restructuring. 

User-friendly interface and versatile features

Easy-to-navigate virtual data rooms come with limitless benefits. With an intuitive interface, you can access the necessary documents, organize the work process, and connect with people without complications.

Compliances and certifications

Data room security requirements are dictated by several standard systems, such as:

  • ISO 27001
  • HIPAA
  • GDPR
  • SOC 2, and others


Apart from ensuring that the provider you are considering complies with your industry’s regulations, ask them about the auditing process. Reputable virtual data room companies usually undergo constant third-party audits by independent organizations.

Customer support

An approachable and helpful support team is a great asset to your business. Look for providers who guarantee 24/7/365 availability via various channels and the capacity to communicate in several languages.

Pricing

Data room budgets vary from one company to another. Aim for providers with flexible pricing in case you will need to upgrade or downgrade the software in the future. 

Essential Data Room Features for Bankruptcy and Restructuring

Before embarking on the search for the best VDR provider, here are the essential data room features that assist during bankruptcy and restructuring.

Intuitive and customizable user interface

As mentioned before, a modern and organized data room can save time and allow users to focus on their responsibilities rather than technology navigation.

  • Pro tip. The most effective ways to evaluate interface intuitiveness are through reading verified user reviews or requesting a free software trial.

Vast format support

Restructuring processes always circulate around large volumes of various-format files. The data room must provide all the necessary instruments for processing documents and other records regardless of their nature.

Dynamic watermarking

Contemporary technology allows to secure documents with complex watermarks that prevent the unsolicited spread of sensitive information.

Group permissions

Group access settings make it easier to process the data room setup. Administrators can assign the privileges based on department, seniority level, or any other criteria that unite several individuals with the same purpose.

Granular user permissions

Individually configured access permissions further secure the VDR and intensify the feeling of confidence among everyone involved. 

  • Pro tip: The ‘View as’ function helps ensure that all contributors have the appropriate permissions to fulfill their duties without compromising security.

Two-factor authentication

Consistent user verification is the best way to ensure critical information remains safe. Depending on the provider, the multi-step authentication will comprise of complex passwords and a code sent via email or text message.

Encryption

The data is secure when it is encrypted. The 256-bit SSL encryption guarantees data safety at rest. And other security controls, such as the TLS protocol, protect it during transfers. 

Virtual Data Rooms For Bankruptcy and Restructuring

VDR Provider
Access Security
Customization
Deployment
Document Management
Q&A
iDeals
  • Access control and expiration
  • Time and IP access restriction
  • Granular user permissions
  • User security impersonation
  • Two-factor authentication
  • Mobile device management
  • Customize logo, color and invitation email
  • Customizable header and footer
  • Language settings
  • Web
  • Linux
  • Android
  • Windows
  • iOS
  • Optimization for mobile devices and tablets
  • Automatic indexing
  • Drag and drop
  • Bulk upload
  • Full-text search engine
  • Windows Explorer integration
  • Q&A reports
  • Live discussions
  • Appointment of experts 
Intralinks
  • Granular user permissions
  • User security impersonation

  • Web
  • Linux
  • Windows
  • Optimization for mobile devices and tablets
  • Auto-indexing
  • Document version control
  • Digital rights for easy file management
  • Easy-to-use Q&A
  • Bulk import of questions
Datasite
  • Granular user permissions
  • Two-factor authentication
  • User security impersonation

  • Web
  • Drag and drop
  • Search in 16 languages
  • Document classification
  • Excel import
CapLinked
  • Group user permissions

  • Web
  • Document access expiry
  • Remote shredding
  • Fence view
  • Q&A assignments
  • FAQ
  • Q&A audit
OneHub
  • Granular user permissions
  • Access control and expiration
  • Two-factor authentication
  • Customize logo, color and invitation email
  • Web
  • Mac
  • Windows
  • Linux
  • Optimization for mobile devices and tablets
  • Drag and drop
  • Automatic versioning
  • Sharing through links
  • No Q&A
Firmex
  • Access control and expiration
  • Granular user permissions
  • User security impersonation
  • IP access restriction
  • Two-factor authentication
  • Custom interface
  • Web
  • Optimization for mobile devices iPhone and iPad
  • Auto-indexing
  • Drag and drop up to 10GB
  • Secure file viewer
  • Basic Q&A module
  • Q&A forums
SmartRoom
  • Access control and expiration
  • Granular user permissions

  • iOS
  • Windows
  • Optimization for mobile devices
  • Zip upload
  • Document redaction
  • Sharing through links
  • Question threading
  • Question status track
Ansarada
  • Access control and expiration
  • Granular user permissions

  • Web
  • Automatic numerical indexing
  • File tagging
  • View-only access
  • Intuitive reports
  • Q&A via email
  • Full audit trail of all Q&A content
SecureDocs
  • Granular user permissions
  • Two-factor authentication

  • Web
  • Full-text search
  • Bulk upload
  • Built-in e-signature
  • Available
DealRoom
  • Granular user permissions
  • Two-factor authentication

  • Web
  • Document access expiry
  • Granular document permissions
  • Remote shredding
  • No Q&A
ShareVault
  • Access control and expiration
  • Granular user permissions
  • Two-factor authentication
  • Customize logo and URL
  • Web
  • Windows
  • Mac
  • iOS
  • Android
  • Optimization for mobile devices and tablets
  • Remote shredding
  • Date and time expiration
  • No Q&A
Citrix Sharefile
  • Access control and expiration
  • Granular user permissions
  • Two-factor authentication
  • Customize logo and color
  • Web
  • Windows
  • Mac
  • iOS
  • Android
  • On-premise Windows and Linux
  • Optimization for mobile devices and tablets
  • View-only access
  • Data backup
  • Document expiry
  • Q&A section with an export option
Digify
  • Access control and expiration
  • Granular user permissions
  • Customize logo, color and URL
  • Web
  • Windows
  • Mac
  • iOS
  • Android
  • Optimization for mobile devices and tablets
  • Restricted forwarding
  • Granular permissions and expiry
  • File index
  • No Q&A
Donnelley Venue
  • Two-factor authentication

  • On-premise
  • Automatic electronic archiving
  • Bulk upload
  • AI contract analysis
  • 4-levels permissions
  • Customizable Q&A workflows

The fastest way to shortlist suitable VDR providers is to compare them according to a specific feature set. Pick several characteristics that will bring the most value to your project, for example, flexible pricing or advanced encryption, and gather all your findings in a spreadsheet. Below is an example of comparing top-performing virtual data rooms based on their format support capabilities.