Confidential Matter, Determination of Financial Solvency Tests
Analysis Group was retained by a commodity trade association to assist in negotiations with a state environmental regulatory agency. At issue were financial solvency tests that the agency was seeking to impose on association members. The tests were designed to ensure that the association members had the ability to meet all their debts as they came due and could bear the costs of closing down production facilities and maintaining them during a multiyear shutdown period. The trade association asked Analysis Group to help it design alternative financial solvency tests to those proposed by the agency that would account, in particular, for the cyclical nature of the industry in which its members operate.