Company restructuring – what is it? At the moment when the company ceases to bring the expected profits, there is a problem with more and more debts, its development is getting weaker. In this situation, the specter of bankruptcy very often appears, therefore restructuring can be considered , as it is a way to avoid liquidation of the company. In the article below, you will learn, among other things, what restructuring really is , what are its benefits and many other important information!
Company restructuring – what it is – general explanation
Many people ask themselves what does the restructuring of the company mean and what are the consequences? Restructuring, also known as restructuring, is a process that involves changes in the entire organization of a given enterprise and in the assets and liabilities that are its property. Do you know that restructuring in enterprises is most often carried out in a situation where the company needs sudden and specific changes in order to maintain its originality and competitiveness.
This solution is very beneficial for the company, because it increases profits, thanks to the restructuring, it is possible to transform the company, which at the same time improves its situation by increasing its value. What is worth remembering? That thanks to restructuring properly conducted, it is possible to avoid the worst situation, which is the declaration of bankruptcy of the company! Importantly, everything takes place with the greatest respect for the rights of creditors, it is worth noting that it is possible to both restructure a sole proprietorship and restructure a company that has various forms of activity, including: civil, public and joint-stock. The restructuring is very precisely described in the Act of May 15, 2015, the so-called Restructuring law.
Restructuring – Reasons for Restructuring
It is worth noting that restructuring may be carried out for various reasons, which can be divided into:
- internal reasons for restructuring – i.e. reasons related to the company, including: high costs related to the company’s operations, too low quality of manufactured products, and ineffective production, which consumes a large amount of material and energy
- external causes of restructuring – these are primarily reasons related to the company’s environment, including, among others: very high industry competitiveness, as well as changes that take place in the economic policy.
What is important? As you can see , the restructuring of the company can be carried out for various reasons, which do not always correspond to the current situation in the company! Because very often problems in the company occur when they relate to external factors beyond the company’s control.
Restructuring processes – types
Did you know that the restructuring of the company is a very complex process that covers various areas of activity? It is also related to the types of restructuring processes, including:
- anticipatory restructuring – the main purpose of this type of restructuring is, first of all, to overtake the competition, it is related to the activities of work organization, employment as well as marketing and finance
- creative restructuring – its operation is based on creating changes that occur over time, this type of restructuring concerns, among others: launching a new product or service on the market
- adaptive restructuring – it focuses primarily on immediate changes that relate to the functioning of a given enterprise. It is of particular importance when the results and thus profits in the company are low and there is a specter of their further deterioration.
- remedial restructuring – focuses on changes whose main purpose is to repair the enterprise and thus protect it from the possibility of bankruptcy.
What are the consequences of restructuring for the company?
You should know that properly conducted restructuring of the enterprise allows you to avoid very serious consequences that may lead to business bankruptcy. This is a very beneficial solution, because the introduced changes can significantly reduce the risk of bankruptcy! What is important? In order for the company to recover from financial problems, it should hire experienced restructuring consultants, because companies that provide professional services in this area will help you choose the best solution for you and your company!
What are the benefits of restructuring?
Restructuring brings a number of benefits for both the indebted entrepreneur and the creditor, in the case of the entrepreneur, the following advantages can be mentioned: the possibility of continuing to run the company, resuming friendly business relations, regaining the creditor’s trust, spreading payments into installments that are realistic for repayment. However, the creditor can count on such benefits as:
- satisfaction as a result of the execution of the arrangement
- possibility of further contracting
- the possibility of cooperation with an indebted entrepreneur
- partial equalization of ordinary creditors with more privileged creditors.