CRO vs turnaround consultant vs interim CEO: mandates, duties and referral conflicts

The verdict

Choose a CRO when the board or lenders need an officer with real authority to run a restructuring, especially close to or inside chapter 11. Choose a turnaround consultant when management stays in charge and needs outside diagnosis, a plan and help carrying it out. Choose an interim CEO when the problem is a leadership gap rather than the balance sheet.

For data-licensing referrals the split is just as clear. Outside advisers can usually refer with proper disclosure, while officers act as the company's sponsor and should treat any personal reward as a conflict to raise with the board and counsel.

Side by side

When a CRO is the right call

A CRO makes sense when the company needs someone inside who can act, not just advise. Lenders often ask for one as a condition of forbearance, and the board delegates authority over cash, vendors and the sale process. Because the CRO is an officer, the role carries the same duties of loyalty and care any officer owes the company. In a chapter 11 case, the arrangement is typically put before the court with disclosure of the firm's connections, and a firm that also provides other services to the estate should expect questions about overlap.

For data assets, a CRO who runs the asset sale process may well be the person who acts as sponsor for any license. The guide to commercial loan forbearance explains how the forbearance window can be used to assess records before systems are cut.

When a turnaround consultant is the right call

A turnaround consultant fits when management keeps control and the company needs a clear outside view: a 13-week cash flow, a cost plan, a lender presentation, operational fixes. The consultant recommends; the CEO and board decide. That distance is what makes the role compatible with a referral partnership, provided the client knows about it.

Consultants also see the early warning signs of records loss. Cost cutting often starts with software subscriptions, and cancelling an old ticketing system or chat workspace without an export erases years of operating history. When that has already happened, the explainer on deleted company archives shows what may survive.

When an interim CEO is the right call

An interim CEO fits when the business needs a leader more than a restructuring: a founder steps back, a chief executive leaves suddenly, or the board wants an operator to stabilize the company before a sale. The interim CEO owes the same duties as a permanent one and signs on the company's behalf, so for licensing purposes the interim CEO is the sponsor, not a referrer.

Who can be a referral partner, and who must disclose or decline

Use one rule: advisers refer, officers sponsor.

1. Outside turnaround consultant, client company. Disclose the partner relationship to the client in writing before introducing, check whether the engagement letter bars other compensation, and confirm what your professional rules say.
2. Outside consultant, company outside the engagement. Anyone can join and refer from their network; disclose the relationship to the company you introduce in the same way.
3. CRO or interim CEO, own company. You act for the company. Work with SourceX as its sponsor, and do not register as the partner for that company unless the board, advised by counsel, approves after full disclosure; in a bankruptcy case, also check what the court and the US trustee require.
4. Court-retained professional in a case. Treat any connection to a transaction in the case as something that may need disclosure to the court, and ask the estate's counsel first.

Many turnaround professionals are CPAs, which brings in a specific rule. The AICPA commissions and referral fees rule (ET 1.520) bars a member in public practice from accepting a commission for recommending a product or service to a client when the member or the firm also performs an audit, review, certain compilations or an examination of prospective financial information for that client, and permitted referral fees must be disclosed to the client (AICPA Code of Professional Conduct). State boards can be stricter.

This is general information, not legal, tax or financial advice. Confirm with your own counsel, tax adviser or professional body before acting.

How rewards work, and what the company sees

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company. Rewards become payable only after the buyer pays and SourceX receives its fee; a lead, meeting or signed agreement alone does not trigger payment. The reward is a share of SourceX's fee and is never deducted from what the company receives, which makes disclosure simpler but does not remove the conflict for an officer.

Which restructuring clients are worth introducing

The companies that fit are US businesses with 50+ full-time employees at peak (contractors excluded), years of operating records spread across many systems, the right to license them and a sponsor who can sign. A company that is still operating, has been sold or has wound down can qualify if the records still exist. Liquidators and asset-sale advisers face similar questions, set out in the playbook for liquidators and asset disposition firms. Where a court-appointed receiver controls the assets, see what an intellectual property receiver does.

Next step

Check a current engagement against who qualifies or the company fit checker. If you are an outside adviser and your disclosure is in order, register as a partner.