Why turn to business restructuring?
Business restructuring aims to rescue struggling companies and turn them around so that they can continue trading in a better way than before.
The process is usually done as quickly as possible once an issue is identified; as the negative effects can be limited the faster things are done.
Essentially, restructuring is the recognition of the need for reorganisation within a company in order to make it profitable or to overcome financial issues.
This could include a change of ownership or a complete overhaul of how business is carried out – it will vary by individual case.
Alternatively it could be in response to bankruptcy, a buyout or the need to restructure debts to avoid administration or liquidation.
Calling on the services of insolvency practitioners
Should issues be considered too difficult to deal with then a business could be declared insolvent and insolvency professionals will then look to recover assets with shareholder interests in mind.
Insolvency advice is available from a qualified insolvency practitioner, as all aspects of the relevant laws and regulations that form the process should be known and relayed to the business owners.
Identifying the state of the business at the start of the process will determine what occurs in the long-term, as a business would need enough liquid assets to be able to complete the chosen solution.
Clear communication is essential, while any corporate restructuring companies would require accurate and detailed information relating to businesses in difficulty.
This helps to identify where any issues might be and if there are ways of preventing a business from losing money unnecessarily.
Restructuring debt payments or cancelling debt for equity are two possible solutions, provided that all parties agree.
A restructured company should be more efficient, better organised and have a greater focus on the vital aspects of business.
These factors would be reflected by their business and financial plans and should leave the company in a much stronger position than it found itself in before.
By Phil Smith