As a business owner in England and Wales, you may need to undergo a business restructuring at some point. This can be for a number of reasons, including: <\/p>\n\n\n\n
Knowing how to navigate a business restructuring is vital in mitigating the stress and potential confusion associated with the process. <\/p>\n\n\n\n
This article will explain some of the key features of a business restructuring. It will also outline some considerations you should keep in mind if you find yourself in this position.<\/p>\n\n\n\n
Restructuring your business means that you review its operational, financial, and legal structures. You do this to make sure that your business is running as effectively as possible. <\/p>\n\n\n\n
Often, a restructuring process is necessary if your company is having financial difficulties with creditors. For example, you may need to restructure if you are undergoing a formal insolvency process. This is called financial restructuring. However, you may also choose to restructure your business if you wish to change operational procedures. This is usually referred to as operational restructuring. <\/p>\n\n\n\n
There are a number of different types of restructuring, which are appropriate for different business situations. Some examples include:<\/p>\n\n\n\n
A debt restructuring is a common way for distressed companies to continue trading despite having issues with creditors. <\/p>\n\n\n\n
A debt restructuring will often involve a ‘company voluntary arrangement’ (or CVA). This is where your company’s debts are transferred into a single payment obligation, which is usually paid monthly. <\/p>\n\n\n\n
This can help you continue to operate your business without significant cash flows problems as a result of debt that you owe to lenders. Businesses can adopt CVAs to continue operating with having to liquidate assets. Once you have completed your CVA (usually after a set amount of years, e.g., 5 years), you will have paid off your company\u2019s debts. <\/p>\n\n\n\n
Corporate restructuring of your company’s legal structure may happen because of a shift in responsibility at the top of your company’s management. <\/p>\n\n\n\n
For example, if your company has merged with or been acquired by another company, then you may have new stakeholders or company directors. These stakeholders and directors will have a say on your board resolution process. To reflect the new corporate structure, you may have to hire a team of lawyers to help draft new provisions in your company’s constitution.<\/p>\n\n\n\n
You may have to restructure your business if you have recently completed a merger or acquisition<\/a> with another business. <\/p>\n\n\n\n A merger or acquisition involves your company joining its operations with another company. Often, this can require a business restructure, especially if you are assimilating aspects of the merging company into your business. <\/p>\n\n\n\n You may also choose to divest certain aspects of your business. For example, you may choose to do an asset sale of parts of your company if it is no longer profitable. This could help your cash flow and help you save on running costs. <\/p>\n\n\n\n If you sell certain important real estate assets, for example, you may have to restructure other aspects of your business to reflect your new operations. Restructuring in this context can involve a restructuring of your business\u2019s legal aspects, as well as its overall operations.<\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n4. Divestment Restructuring<\/h3>\n\n\n\n