In the midst of the unfolding credit crunch crisis, both debtors and creditors will need to strengthen their management, tracking and oversight capacities, says Marc Duchesne who leads Borden Ladner Gervais LLP's Insolvency and Restructuring Group in the Firm's Montréal office.

'I have seen so many companies go down because they were not well managed financially,' Duchesne says. 'They do sales, but they do not collect their receivables. They don't know if they are making money on each sale because their cost of production is too high versus the sale price. And too many of them are in love with too much inventory that could be sold off – even below cost – to increase liquidity.'

As Canada sinks into a recession, Duchesne suggests that companies ensure they have an effective chief financial officer in addition to computer software to maintain close tabs on the cost of sales, the collection of receivables and to assure bankers and creditors on a regular basis that the situation is being managed with attention to detail despite the company possibly being overextended.