{"id":886,"date":"2021-12-22T05:58:21","date_gmt":"2021-12-22T05:58:21","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=886"},"modified":"2025-07-02T00:42:37","modified_gmt":"2025-07-01T23:42:37","slug":"restructure-company","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/restructure-company\/","title":{"rendered":"How Do I Restructure My Company in England and Wales?"},"content":{"rendered":"\n<p><span style=\"font-weight: 400\">If you own a company and believe it may not be able to meet all of its debt obligations in the future, a corporate restructuring may be an option to rescue your company. Some business owners and investors opt to restructure their company,<\/span> as this<span style=\"font-weight: 400\"> is often preferable to the alternative of initiating <a href=\"https:\/\/legalvision.co.uk\/corporations\/company-trade-whilst-insolvent\/\">insolvency proceedings<\/a>. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">This is because a successfully negotiated restructuring often means the business will continue to trade while its creditors will get repaid.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">This article will first explain restructuring before exploring the circumstances when you should consider initiating these proceedings. Finally, we will examine the various options to restructure your company and how you can initiate them.\u00a0<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">What is Restructuring?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">A corporate debt restructuring (or a financial restructuring) is where a company and its creditors agree to renegotiate the terms of any existing debt. The aim is so that the company can continue to meet its obligations while also continuing trading. In most cases, creditors are lenders such as banks.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">You can restructure your company through various means, such as:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">refinancing an existing loan;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">giving concessions to your lenders; or&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">taking on additional debt.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">In some cases, all you need to do is have both parties come to an agreement and sign a new contract. However, in other cases, you will need to follow certain legal procedures. These are called statutory proceedings. Likewise, it may require the court\u2019s approval before the parties can implement the restructuring plan.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">When Should I Consider a Restructuring?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Restructuring is an option for companies experiencing financial difficulties. Companies experiencing financial hardship are often called \u201cdistressed companies.\u201d<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you believe any of the following apply to your company, you should consider exploring restructuring options:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">you will not have enough cash to make payments to your company\u2019s creditors, including lenders like a bank;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">you believe your company is not or will not be able to abide by the terms of a loan, such as maintaining a sufficient amount of cash on hand; or<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">your company has or will soon trigger an \u201cevent of default.\u201d These events permit your lender to bring the loan to an end and demand payment. Your loan agreement will define what these events include.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">As a general rule, it is better to be proactive than reactive. <\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">It may be that none of the above scenarios applies to your company. However, if you think you will have financial difficulties in the future, you should at least start considering restructuring options in case things get progressively worse.\u00a0<\/span><\/p>\n\n\n\n\n<a href=\"#content-next\"\n   class=\"block p-4 mt-10 text-xl font-bold text-center text-white no-underline bg-gray-800 rounded-t-xl\">\n    Continue reading this article below the form\n    <i class=\"text-xl fa-regular fa-arrow-down\"><\/i>\n<\/a>\n<div class=\"px-6 pt-10 pb-12 mb-10 text-center bg-gray-100 rounded-b-xl sm:px-12 test\">\n    <div class=\"mb-8 text-2xl font-bold text-orange\">\n        Need legal advice?\n        <br>\n        <span class=\"text-lg not-prose\">\n                            Call <a href=\"tel:+448081968584\" class=\"not-prose\">0808 196 8584<\/a> for urgent assistance.\n                <br>\n                Otherwise, complete this form, and we will contact you within one business day.\n                    <\/span>\n    <\/div>\n\n    \n\n<div 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This means that both the company and a sufficient number of creditors must agree to begin the process.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Therefore, your creditors may decide that:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><span style=\"font-weight: 400\">there is no inherent value in your company\u2019s business;\u00a0<\/span><\/li><li><span style=\"font-weight: 400\">the company does not have an adequate medium- to long-term business plan; or<\/span><\/li><li><span style=\"font-weight: 400\">the creditors\u2019 cannot come to an agreement between themselves<\/span>. <\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">In this case, they may not consent to a restructuring. You would then have to consider <a href=\"https:\/\/legalvision.co.uk\/corporations\/winding-up\/\">other rescue options<\/a>.\u00a0<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">How Does the Process Work?<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">Ultimately, debt restructurings are agreements between the company and its creditors. Therefore, the general process is to alert the creditors of your intention to enter into a restructuring.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">There are various processes available to restructure your company. Notable, the decision will depend on factors like:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">how big they are;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">how many creditors they have;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">what the terms of any issued debt specify; and&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the negotiating position of all parties, including between the various creditors.<\/span><\/li><\/ul>\n\n\n\n<p><span style=\"font-weight: 400\">Generally, your company may only have a single financial creditor, such as a loan with a bank. In that case, it will be easier to negotiate a restructuring. In fact, you may just need to refinance your loan. This effectively means entering into a new loan agreement.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Things get more difficult if you have multiple different kinds of debt with different creditors. This is because where there is more than one creditor, the risk that each creditor will not get paid back in full increases. Additionally, each creditor&#8217;s security agreement concerning your assets may differ depending on the kind of loan. Unfortunately, this can complicate the process.\u00a0<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Importantly, if your company has significant debt, the restructuring process usually moves through three stages:<\/span><\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><span style=\"font-weight: 400\">Establishing the creditors\u2019 committee<\/span>. <\/li><li><span style=\"font-weight: 400\">Negotiating a standstill agreement<\/span>. <\/li><li><span style=\"font-weight: 400\">Negotiating the restructuring agreement.\u00a0<\/span><\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Creditors\u2019 Committee<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">If enough of your company\u2019s creditors agree to begin a restructuring proceeding, they will convene a committee. This committee will enable the creditors to:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">liaise between themselves and your company;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">nominate their own advisers, like lawyers and accountants; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">negotiate the standstill and restructuring agreement.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">The Standstill Agreement<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">This agreement is a way for the creditors \u201cto agree to agree\u201d that they will work together throughout the process. Since it is an agreement between the creditors themselves, it does not concern your company as much.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">The Restructuring Agreement<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">There are two main elements to the restructuring agreement:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">what will happen to the existing debt; and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">implementing agreements for the future.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">The Existing Debt<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">There are several ways that your company can restructure the existing debt. Some examples include:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">extending the date that the debt is due;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">deferring or rescheduling when debt payments will be made;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">adding any outstanding interest back into the debt principal (\u201ccapitalisation of interest\u201d); and<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">swapping any existing debt for equity.<\/span><\/li><\/ul>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">In practice, the restructuring agreement may implement a combination of these options.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Agreements for the Future&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400\">Your creditors will want to have confidence that your business will continue and that they will get repaid. Additionally, they will want some compensation for spending their resources on implementing the restructuring agreement.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">Therefore, it is common to include as part of the restructuring agreement:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">how much your company will pay in additional fees;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">if your <a href=\"https:\/\/legalvision.co.uk\/corporations\/business-issue-shares\/\">company\u2019s shareholders<\/a> need to inject more money into your company (\u201cequity injections\u201d or \u201cequity cures\u201d);&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">what sort of measures your company\u2019s management will take to preserve cash and increase your company\u2019s cash flow;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">if you need to implement additional terms in the agreement (known as \u201ccovenants\u201d or \u201cundertakings\u201d); and&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">if your company should grant additional security over your company&#8217;s assets. This security gives your lender the right to sell the assets to pay off your debts.<\/span><\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Key Takeaways<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400\">A restructuring can be a lengthy, difficult, and expensive process. But it is often better than the alternative, which is to initiate insolvency proceedings and liquidate your company. The exact nature of the process will depend on:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the size of your company;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">how much debt it has;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">how the debt is structured;&nbsp;<\/span><\/li><li style=\"font-weight: 400\"><span style=\"font-weight: 400\">the number of creditors you have and their intentions.&nbsp;<\/span><\/li><\/ul>\n\n\n\n<div class=\"box box--icon box--info\">\n<p><span style=\"font-weight: 400\">The goal is to reach an agreement where your company can continue trading while also ensuring that you can repay your creditors.&nbsp;<\/span><\/p>\n<\/div>\n\n\n\n<p><span style=\"font-weight: 400\">You should bear in mind that many of the terms put forward by your company\u2019s creditors may not seem favourable to your company. However, this is the nature of the restructuring process. Again, the alternative is usually much worse.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400\">If you need help with initiating a restructuring process, our <a href=\"https:\/\/legalvision.co.uk\/corporate-lawyers-lp\/\">experienced corporate lawyers<\/a> can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Visit our <\/span><a href=\"https:\/\/legalvision.co.uk\/membership\"><span style=\"font-weight: 400\">membership page<\/span><\/a><span style=\"font-weight: 400\">.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400\">Frequently Asked Questions&nbsp;<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1640152115169\"><strong class=\"schema-faq-question\"><strong>What is restructuring?<\/strong><\/strong> <p class=\"schema-faq-answer\">A corporate debt restructuring is when both the creditors and the indebted company agree to alter the terms and conditions of any outstanding loans. Generally, this occurs by extending the maturity date of when loans come due or when you need to make payments. Alternatively, you can consolidate existing loans into a single agreement or recalculate any interest paid. Finally, you can consider converting the debt into equity.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1640152127474\"><strong class=\"schema-faq-question\"><strong>What is the process of corporate restructuring?\u00a0<\/strong><\/strong> <p class=\"schema-faq-answer\">The exact process to restructure your company depends on particulars like its debt and the motives of its creditors. Importantly, a restructuring usually requires the agreement of both the creditors and the company. So, the first step is to determine if the creditors are willing to entertain the idea. This will depend on your company\u2019s predicted future performance. If they agree, the rest of the process is hammering out the exact terms of the agreement.<\/p> <\/div> <\/div>\n<div class=\"not-prose m-feedback-prompt\">\n    <!-- Thumbs up\/down bar -->\n    <div class=\"m-feedback-prompt__main\">\n        <div class=\"m-feedback-prompt__title\">Was this article helpful?<\/div>\n        <div>\n            <!--span class=\"m-feedback-prompt__button--text\">Thanks!<\/span-->\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--yes\"\n                    data-analytics-link=\"feedback-prompt:yes\" aria-label=\"Agree\">\n                <i class=\"fa-regular fa-thumbs-up fa-3x\"><\/i>\n            <\/button>\n            <button type=\"button\" class=\"m-feedback-prompt__button m-feedback-prompt__button--no\"\n                    data-analytics-link=\"feedback-prompt:no\" aria-label=\"Disagree\">\n                <i class=\"fa-regular fa-thumbs-down fa-3x\"><\/i>\n            <\/button>\n        <\/div>\n    <\/div>\n\n    <!-- Feedback form -->\n    <div class=\"m-feedback-prompt__form\">\n        <div class=\"m-feedback-prompt__form--thanks \">\n            <div>Thanks!<\/div>\n            <p>\n                We appreciate your feedback \u2013 your submission has been successfully received.            <\/p>\n        <\/div>\n        <form id=\"contact-form\" class=\"m-feedback-prompt__form--form\" action=\"\" method=\"post\">\n            <input type=\"hidden\" id=\"authenticity_token\" name=\"authenticity_token\" value=\"9eb4f72322\" \/><input type=\"hidden\" name=\"_wp_http_referer\" value=\"\/api\/wp\/v2\/posts\/886\" \/>            <input value=\"https:\/\/legalvision.co.uk\/corporations\/restructure-company\/\" type=\"hidden\" name=\"currenturl\"\n                   id=\"currenturl\">\n            <input value=\"How Do I Restructure My Company in England and Wales?\" type=\"hidden\" name=\"currenttitle\"\n                   id=\"currenttitle\">\n            <label>\n                <!-- display on thumbs-up -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--yes\">\n                    Can you tell us <span class=\"font-semibold\">why<\/span> you found it helpful?\n                <\/span>\n\n                <!-- display on thumbs-down -->\n                <span class=\"m-feedback-prompt__feedback m-feedback-prompt__feedback--no text-lg\">\n                    How can we better improve this article?\n                <\/span>\n                <textarea name=\"feedbackmessage\" id=\"feedbackmessage\" required><\/textarea>\n            <\/label>\n\n            <div class=\"m-feedback-prompt__form--error\" id=\"form-submit-error\"><\/div>\n            <button id=\"submit-contact-form-button\" type=\"submit\" name=\"commit\" class=\"m-feedback-prompt__form--submit\"\n                    data-analytics-link=\"feedback-prompt:submit\">\n                Submit            <\/button>\n        <\/form>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>If you own a company and believe it may not be able to meet all of its debt obligations in the future, a corporate restructuring may be an option to rescue your company. Some business owners and investors opt to restructure their company, as this is often preferable to the alternative of initiating insolvency proceedings.<a href=\"https:\/\/legalvision.co.uk\/corporations\/restructure-company\/\">Continue reading <span class=\"sr-only\">&#8220;How Do I Restructure My Company in England and Wales?&#8221;<\/span><\/a><\/p>\n","protected":false},"author":13461,"featured_media":553,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_relevanssi_hide_post":"","_relevanssi_hide_content":"","_relevanssi_pin_for_all":"","_relevanssi_pin_keywords":"","_relevanssi_unpin_keywords":"","_relevanssi_related_keywords":"","_relevanssi_related_include_ids":"","_relevanssi_related_exclude_ids":"","_relevanssi_related_no_append":"","_relevanssi_related_not_related":"","_relevanssi_related_posts":"1513,1591,2376,2172,492,2429","_relevanssi_noindex_reason":"","editor_notices":[],"footnotes":""},"categories":[28],"tags":[89,90,91,92,93],"class_list":["post-886","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-corporations","tag-corporation","tag-company","tag-restructure-business","tag-distressed-company","tag-trigger-event"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.1.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Restructure My Company in England and Wales | LegalVision UK<\/title>\n<meta name=\"description\" content=\"Corporate restructuring may be an option to rescue your company. 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He has completed a Law Degree, the Legal Practice Course and a Masters in Sports Law, specialising in Football Law.","url":"https:\/\/legalvision.co.uk\/author\/kieranram\/"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/corporations\/restructure-company\/#faq-question-1640152115169","name":"What is restructuring?","acceptedAnswer":{"@type":"Answer","text":"A corporate debt restructuring is when both the creditors and the indebted company agree to alter the terms and conditions of any outstanding loans. Generally, this occurs by extending the maturity date of when loans come due or when you need to make payments. Alternatively, you can consolidate existing loans into a single agreement or recalculate any interest paid. Finally, you can consider converting the debt into equity.","inLanguage":"en-GB"},"inLanguage":"en-GB"},{"@type":"Question","@id":"https:\/\/legalvision.co.uk\/corporations\/restructure-company\/#faq-question-1640152127474","name":"What is the process of corporate restructuring?\u00a0","acceptedAnswer":{"@type":"Answer","text":"The exact process to restructure your company depends on particulars like its debt and the motives of its creditors. Importantly, a restructuring usually requires the agreement of both the creditors and the company. So, the first step is to determine if the creditors are willing to entertain the idea. This will depend on your company\u2019s predicted future performance. 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