Many companies are experiencing financial difficulties as a result of the current climate of economic uncertainty, fast-moving markets, increased competition and outdated business models. As Trustees & Receivers we are often involved in corporate restructuring, a process which many clients find confusing.
We know there is confusion about the meaning of the terminology, the roles played by the various stakeholders and professionals, and the difference between a restructuring business plan and the Proposal. I’ll attempt to demystify it for you.
What is corporate restructuring
Corporate restructuring is a strategy to move from financial harm and return to a financially viable state.
When to consider restructuring
When a company is having trouble making payments on its debt and this situation is one that may lead to the company’s collapse, corporate restructuring should be considered.
Corporate restructuring increases a business’ efficiency – reducing costs, increasing profits – and therefore avoiding closure.
When is a company eligible for restructuring
There is a general principle we use in determining if a business is a good candidate for financial restructuring. It is that they must have a core business that is viable. First they must shed themselves of their debt which is weighing them down. They must also develop a business plan and model that will be profitable. Then they will be able to continue to run.
When should you contact a trustee?
If your company is experiencing serious financial difficulties, the sooner you contact a trustee, the better.
Contact Ira Smith Trustee & Receiver Inc. We will evaluate your situation and create an effective restructuring plan that will help your company to become financially sound, Starting Over, Starting Now. We will help you avoid a company bankruptcy.
Watch for our next blog – Corporate Restructuring Part 2 – when we’ll be addressing the key players, stakeholders and roles in a corporate restructuring.