Restructuring

Restructuring

This Overview outlines restructuring of companies and gives onward links to relevant materials in this subtopic. A successful restructuring needs a viable underlying business, although typically the business will be burdened by too much debt, which means it cannot service interest and principal repayments when they fall due.

Solutions for distressed companies

Different solutions are available depending on the level of the distress, including:

•
a quick fix change to current management
•
a consensual restructuring, using a standstill agreement and restructuring agreement
•
a non-consensual restructuring such as a pre-pack administration, or
•
formal liquidation or enforcement of security

Benefits of restructuring

The main benefits of restructuring include:

•
greater returns than on liquidation
•
less publicity
•
more flexibility
•
existing management/directors are retained, and
•
less stigma than liquidation

For a discussion of the benefits of a consensual approach rather than a formal one, see Practice Note: Benefits of informal restructuring over formal proceedings.

Process

The key stages of the process include:

•
agreeing

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