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A Step By Step Guide to an Effective Company Restructure

Guide to an effective company restructure

As a business grows, there will inevitably be challenges and ever-changing market conditions—many of which are unforeseen. To survive in a hyper-saturated, competitive market, companies have to be agile and willing to pivot in order to capitalize on opportunities or optimize inefficiencies.

Often, tough decisions need to be made, whether it is rejiggering strategic and financial operations or fully restructuring the company. But successfully implementing sweeping organizational changes is no simple task. It requires vision, a plan, and, most importantly, the participation of all employees and stakeholders.

A haphazard plan or a restructure that does not have support from C-suite on down will be dead on arrival. So, how can you effectively and successfully restructure a company?

This guide has your answers.

Reasons For a Company Restructure

To fund growth opportunities and drive progress, companies must engage in a ceaseless hunt to cut costs, be they administrative, general, or sales-related. Often, these cost-reduction strategies involve a reorganization or a restructure of the business (or a department within the business).

In fact, according to McKinsey , “Approximately 60 percent of companies in the S&P 500 have launched large-scale cost-reduction and reorganization initiatives within the past five years.”

Typically this is done for one—if not several—of the following reasons:

  • There are organizational problems – Common issues include departmental conflicts, internal inefficiencies, talent mismatches, bureaucratic waste, job overlap, lapses in accountability, or communication breakdowns.
  • A key person has left the company – Certain key members of a company can have an outsized impact on the business decisions and organizational structure.
After Apple’s head of design, John Ive, departed the company, CEO Tim Cook pushed a restructure that rebalanced the power dynamics between the design and operations departments. This was in response to the fact that product decisions had been made favoring aesthetic design and form over practicality and durability, resulting in impractical costs and poor customer feedback.   
  • The market is shifting – Industries and consumer behavior can shift on a dime. Sometimes a restructure is necessary to seize on a new opportunity or to capitalize on changing markets, consumer bases, products, or services.
  • Your company is growing or (shrinking) – As a company fluctuates in size, internal structures must change in accordance.

For instance, Google was growing at such an exponential rate that it was becoming an impossible task to manage as one entity. So, the leaders of the company decided to deconstruct the behemoth by breaking up into the Alphabet Umbrella, which consisted of more than 40 subsidiaries and sub-holding companies, each with its own goals and a CEO focused solely on attaining them. This structure looks like :

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How To Effectively Restructure a Company

So, how can you begin the restructuring process? Consider these five steps.

Step 1: Are You Restructuring or Reconfiguring?

Sometimes, a business needs sweeping changes across the entire entity. And for other companies, all that may be required are slight modifications.

One of the first critical decisions you have to make is opting for a total restructure or a simple reconfiguration. As Harvard Business Review notes, two factors play into this decision:

  • The level of dynamism or turbulence in your industry
  • How urgently you require a strategic shift

According to their research, fast-moving markets—those which fluctuate in size and are responsive to newly emerging competitors—typically respond better to reconfigurations since a restructure can take too long to accomplish in time. But for smaller firms or companies in industries experiencing significant disruption, a total overhaul may be the better approach.

Step 2: Develop Your Criteria

If major changes are to be made, then you will need to clearly outline an action plan with specific, measurable, achievable, realistic, and timely (SMART) goals.

Discuss the issues you are actively attempting to fix as well as the opportunities you hope to seize. Then, rank each of these criteria according to priority—they will be the benchmarks you use to evaluate potential structural alternatives and then measure your success.

As you brainstorm restructuring options, do not fall in love with a single action plan. Instead, have several contingency plans ready so that you can test as you go, responding to what works.

Step 3: Gather the Right Team 

You need the right personnel in place to install organizational changes. For your transition management team, key people will have to take agency over various different roles. What that looks like depends on the size of your company and your specific industry.

That said, ideally, you want a mixture of company leaders and a small team of trusted advisers representing different parts of the business.

Step 4: Communicate

A company restructure can be an unsettling experience, especially for employees who may worry how these shifts will impact their careers or futures at the company. This uncertainty is unhealthy both on an individual level and for the company as a whole.

As you go about the process, be transparent with your intent. Consider building out a visualization for what the new structure will look like and the underlying motivations for the changes. According to The Balance : “Stakeholders, including employees, are more likely to get on board if you not only share the “what” and “why,” but explain the alternatives you did not choose and why.”

Remember, change takes acclimation. And that is especially true if the process involves personnel cuts. Give employees space and time to soak it in, ask questions, and gain a sense of what the restructure will look like.

Step 5: Monitor and Share Success

After a restructure has taken effect, it is important to closely monitor the situation. In doing so, you can confirm that you are moving toward your target and making small course corrections as necessary.

During this process, be sure to regularly highlight wins for the company to demonstrate that the major changes are working. This could be anything from an ROI increase to capturing a larger market share.

From the inside, it is much harder to have perspective and see the fruits of difficult decisions. By getting excited about your progress, you can inspire employees to share your enthusiasm and instill confidence that the company is heading in the right direction.

CFO Hub: Your Partner in A Restructure

A company restructure can create significant lift for a business that results in efficiencies, cost reductions, and competitive advantages— can being the operative word. A restructuring can also be disastrous if you fail to properly plan and execute.

Do you feel like you need help restructuring your company?

Then you’re in the right place.

At CFO Hub, we offer outsourced CFO solutions and financial and strategic consulting. Whether you’re looking for the help of a single expert or an entire team of financial wizards, we have the professionals you need to successfully restructure or reorganize your company.

To discover more, contact us today.

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Recently, many organizations have been stretched to the breaking point as they try to remain cost-effective, agile, and ultimately profitable. Reorganizations have become an unfortunate side-effect of the pandemic and, although the economic outlook appears more positive, the sense of uncertainty will continue.

Many predicted that large companies would need to restructure during Covid, but most have remained resilient. However, as government support and capital become more restricted, those with higher debt loads and incurring structural market changes may find themselves in need of help.

Numerous companies took on significant debt during the pandemic. Global corporate debt rose 10% in the one-year period between quarter three 2019 and in 2020, compared to 3 to 4% per year in the preceding decade (with no increase following the 2008 downturn) . This increased leverage will affect companies’ balance sheets for many years to come. As businesses continue to navigate challenging circumstances and restore value, there is greater pressure to chart a profitable course for the future.

When teetering on the brink of a restructuring process, business leaders must establish a clear vision that restores stability and defines their future business model. In our experience, there are five actions that should be taken to ensure successful restructuring: engage advisors early, create transformational champions, set appropriate targets, have a clear and detailed plan, and recognize the importance of change management.

Engage advisors early

In all cases, identifying and diagnosing issues early is the best defense. CEOs should always have, and boards often require, a downside plan. With early diagnosis, a company can fully evaluate options and avoid being cornered. Engaging early, by way of an out-of-court restructuring, is often the most viable and pragmatic option. Here, having the right advisors is crucial.

Advisors form a three-legged stool: lawyers, debt-advisors, and business consultants, who need to collaborate with company management and with each other. It’s important to select those who have experience both in restructuring processes and in your specific industry.

Select advisors with restructuring and industry experience

Create change champions

At face value, restructuring looks like an economic problem that can be fixed by making swift top-down decisions to address debt loads and pushing through operational changes. However, if businesses are to truly transform, they need to start by finding the right people for the journey.

The first step is to identify and select leaders at each critical level of the organization who can become “change champions.” These well-networked go-to people and opinion makers will embrace the vision, drive the change process, and influence those around them. This strengthens the accountability and viability of the transformation.

For example, a retail client needed to restructure following a multi-year decline in sales. They assembled a transformational leadership team that was fully aligned with the restructuring vision and able to quickly implement a new course for the future. This leadership team and alignment was recognized as a key success factor in the client's return to growth and increase in profitability.

Leaders need to embody, own, and drive the future vision of the organization

In a restructuring, leaders need to embody, own, and drive the future vision that the organization can rally behind. It’s important to recognize that, in general, not all current leaders have the desire to embrace a new vision quickly. Those who are part of the future must also commit to enduring the bumpy ride.

Set appropriate targets

The future needs to be different than the past. This can be communicated through financial targets that the company sets and the business strategies it employs.

Targets should be both ambitious and realistic

Targets should be both realistic to ensure credibility, and ambitious enough to see that change occurs. Achieving this balance requires teamwork and constructive discussion within the leadership team. Once targets are set, a small number of clear and specific metrics should be communicated and brought to life by business leaders in each area.

During the restructuring process, think outside the box and set demanding goals and milestones that align with your strategic objectives. Envision where you want to be in the future instead of pursuing incremental change based on your current state.

Organizations should be wary of implementing across-the-board cuts during restructuring proceedings. While this may be a common approach, these one-size-fits-all reductions can result in incorrectly sized departments and poor employee morale. Instead, use nuanced analysis by function.

One transportation client started its restructuring by benchmarking itself against the lowest cost competitor in the region and setting bold efficiency targets in every department. Many targets could be achieved immediately, while others required the company to define a plan to overcome roadblocks and reach strategic objectives within 6 to 12 months. This resulted in near-term cost savings ranging from 20 to 60% across several business functions, with an average cost reduction of approximately 40%.

Have a clear and detailed plan

When developing an operational turnaround plan, it’s important to gain rapid clarity about future organizational needs, minimizing or eliminating excess wherever possible. Tools such as zero-based organization (ZBO) and zero-based assets (ZBA) can help reach ambitious targets. In a restructuring, it is important to demonstrate to internal and external stakeholders that the organization is prioritizing the highest impact activities, such as rightsizing the footprint, supply chain, and headcount to align with future strategy.

Prioritize the highest impact activities to maximize value...and move fast

These tools can also help to either invest in activities that are central to the organization’s value proposition, or, eliminate activities that no longer support the strategy. Likewise, it’s important to pinpoint the one-time costs required to implement these changes. Digitization is a crucial enabler of long-term cost reduction however should only be utilized when the appropriate people and processes are in place.

By using a ZBO approach, two different airlines managed to reduce their management and administrative costs by between 37 and 42%. Through categorizing and benchmarking all activities against the CEO’s future state goals, they were able to differentiate activities that would drive the future business from those that could be automated, simplified, or even eliminated. This combination of process and speed enabled the business leaders to make the right decisions rapidly, maintaining alignment with their future vision.

In a restructuring, you also need to move fast. It is critical to maintain a simple, documented list of significant transformational milestone activities and dates for transparency and accountability.

Recognize the importance of change management

Change is challenging; therefore, engage your employees using reason and emotion to help them embrace the transformation. The most successful change management programs focus significantly on shifting culture, but this change only works if there is a high degree of psychological safety, where employees can vocalize concerns and opinions without fear of repercussion. Listening to ideas for improvement that have been overlooked or thought difficult to achieve is critical, while focusing on the most impactful items.

Careful communication is essential. Before making external announcements, internal changes should be communicated using in-house forums such as townhalls and department meetings. Employee sentiments should be distilled regularly.

Your leaders should be prepared to over-communicate, clearly articulating to employees about the challenges – and the opportunities – that lie ahead as the turbulent times pass. Empathy and humility are important traits to reassure your people that leaders are supporting them despite the hard decisions.

Final thoughts

While in the very short term “cash is king,” in a major restructuring it is vital that the collective team focuses on maximizing long-term value which supports the strategy. This sets the context of the entire transformation and allows employees to feel a sense of ownership rather than resist change. Done well, it gives leaders the opportunity to reframe the organization for a more resilient future.

Thanks to Morgan Zaidel for contributing to this article.

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How to Develop a Successful Business Restructuring Plan

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Table of Contents

Creating the perfect business restructuring plan is the most important thing you can do when looking to restructure your company. 

A shoddy plan will inevitably lead to a shoddy restructure, and ultimately can lead to making what was an efficient and well run business before, a hodge-podge of different ideas and plans. 

Business restructuring can be one of the most effective ways to transform a business and get it back on the right track, or to prepare it for an exciting new future. 

This blog details what to consider when developing a business restructuring plan, the importance of restructuring, and more.

What is a Business Restructure?

Restructuring is a term to describe when a company changes its core structure in a meaningful way. This could be a change to the organisational structure of the business (changing management roles, shifting resources, and putting focus on new areas etc.), or it could be an adjustment to the businesses finances (selling off assets, refinancing debt etc.). 

A business opting to restructure usually comes about after a period of financial difficulty. It is commonly used as a method to improve the business in order to better its prospects going forward. 

If a business is in particular financial peril, a successful restructuring can be one of the most effective methods to find the required funds needed to pay off a debtor. 

For more information about what business restructuring entails, please check out our blog on the subject.

Reasons for Business Restructuring 

There are a variety of reasons a business may wish to restructure. The most common causes are that a business is struggling to operate under its current structure, or is looking to prepare for a new opportunity 

— such as a takeover or expanding into new markets. 

However, a business wishing to restructure is not limited just to these two core causes, there are a whole host of possible reasonings:

  • Reduce costs to decrease/consolidate debt
  • Put increased focus on underutilised teams/staff/departments 
  • Refocus on key products/accounts/services
  • Customer/client needs and wants have shifted 
  • Incorporate all new technology and services 
  • Merge with another company 
  • A key member of staff has left, leaving a hole to fill
  • Unforeseen organisational growth or recession

How to Restructure a Business 

Regardless of if you are opting to restructure your business to consolidate debt or facilitate growth, there are a variety of steps you need to ensure you follow if you want to maximise your chances of a successful business restructuring plan; such as gaining an overview of the business, preparing to change your plan, and more. 

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If you feel that you aren’t totally familiar with the process of creating your own business restructuring plan, it may be worthwhile to consider seeking out a specialist who can act to guide you throughout the process.  

Understanding the key aspects of a business restructure is important to research before you begin the process – get it wrong and you could find yourself with an inefficient business.

Take a Step Back

One of the most important steps in creating a successful business restructuring plan is to formulate a cohesive strategy; why do you wish to restructure in the first place, what is the short-term and long-direction of the business after the restructure etc.

If you are in the process of developing a plan and you haven’t yet considered your business strategy, it may be prudent to take a step back and analyse your current situation:

  • Is your current business plan still relevant? If not then you will likely need to evolve its strategy
  • Are you targeting your business at the right audience, will the restructure affect this? 
  • Are current customers/clients happy with your service, how could a restructuring change this? 
  • What do the businesses finances look like currently?

Without a clear, uncompromising idea of why you are seeking a business restructure, or where it may lead, there will be nothing to shepherd the direction, or base the success of the restructuring on. 

Analyse Finances  

A clear understanding of the businesses finances, including a clear picture of assets and debts will go a long way towards ensuring a successful business restructuring. 

It is vital to get an understanding of where a business stands today, how it got to that point, and how it plans to improve from then on. A clear analysis of a company’s finances makes it significantly easier to formulate a clear timeline.. 

Formulate a New Structure 

After taking as step back to assess the situation and comprehensively analyse company finances, the next step is to formulate your firm’s new operational model 

Some things to bare in mind when creating your new model are: 

  • Who has authority within any departments affected by the restructure 
  • How streamlined will the operation be post-restructure 
  • How will departmental budgets be split for those affected by the restructure

Communication is Key 

Once you have considered the finer points of your business restructuring plan, it is important if you want everything to go off without a hitch, to at this stage share your plan with employees. 

Get them excited for the restructure, share your ideas for the changed roles and departments. Make transparency and honesty the focus and, if you are lucky, members of the team may be able to help.

speech bubble on table

Nobody will know more about the pros and cons of the business restructure than those currently doing the job. They may be able to offer their insight, which in turn you can use to improve your plan.

It is also key that you communicate your plans with management and senior members of the team ahead of time so they are able to answer any possible questions other employees may have at a later date. 

Be Prepared to Adjust 

From the very moment you first consider a change, right through the creation of your plan, and all the way through until after you are restructured, you must always be prepared to listen to people’s opinions and be ready to tweak your strategy. 

A successful business restructure is one that has listened to common sense and been able to adjust to new realities. 

3 Components of the Business Restructuring Process

When it comes to the business restructuring process, there are a few key components to ensure everything goes smoothly. Strong leadership, perfect timing, and ample planning are likely the three most important factors when preparing for a business restructure, if you get any one of these three components wrong, you could be setting yourself up for a disaster. 

While there may be three core components, each business restructure is different, and what is key to the success of one may be of little importance to another so do your research and make sure you’re prepared for any eventuality. 

Strong Leadership 

If you aren’t 100% up to the job of steering the ship through the occasionally choppy waters of a business restructuring, then ultimately it will likely be doomed to fail. 

An effective leader will need to be decisive in navigating towards the company goals. Focus, drive, and attention to detail are just a few of the key characteristics you will need throughout the process. 

A strong leader during a restructuring will also be important to convince all employees that the plan is the correct way forward for the business, get everybody on board and things will go much more smoothly. 

Ample Planning 

All details of the restructuring will need to be considered if you have any chance of it being a success. 

Consider all angles, analyse the business from top to bottom, formulate a clear plan of exactly where the restructuring is most necessary. 

You can’t afford to go into things with anything less than 100% effort throughout.

Perfect Timing 

Being able to adapt on the fly, or see trends before they come to a head and realise that your business needs to restructure at the right time could be the key to success. 

Noticing the need to restructure too late could lead to the more pressing needs getting out of hand and not being able to be fixed with a simple restructure. 

Immediately after you decide that a restructuring is the optimal course of action, you should begin the process of ensuring everything you will need to complete the plan is in place.

How Inquesta’s Business Restructuring Services Can Help

At Inquesta we have years of experience assisting businesses with preparing the perfect business restructuring plan for them. 

With ample expertise, and the ideal team, we are perfectly equipped to help make your business flourish from top to bottom. 

We have a guide available on our website, providing you with tips and information to guide you through the restructuring process. 

For more information about how Inquesta can help you, book a free consultation or contact our team today. 

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What Is Restructuring?

Understanding restructuring.

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Restructuring: Definition, Meaning, Process, and Example

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Restructuring is an action taken by a company to significantly modify the financial and operational aspects of the company, usually when the business is facing financial pressures. Restructuring is a type of corporate action taken that involves significantly modifying the debt, operations, or structure of a company as a way of limiting financial harm and improving the business.

When a company is having difficulties with making the payments on its debt, it will often consolidate and adjust the terms of the debt in a debt restructuring , creating a way to pay off bondholders. A company can also restructure its operations or structure by cutting costs, such as payroll, or reducing its size through the sale of assets.

Key Takeaways

  • Restructuring is when a company makes significant changes to its financial or operational structure, typically while under financial duress.
  • Companies may also restructure when preparing for a sale, buyout, merger, change in overall goals, or transfer of ownership.
  • Following a restructuring, the company should be left with smoother, more economically sound business operations.

There are numerous reasons why companies might restructure, including deteriorating financial fundamentals , poor earnings performance, lackluster revenue from sales, excessive debt, and the company is no longer competitive, or too much competition exists in the industry.

A company may restructure as a means of preparing for a sale, buyout , merger, change in overall goals, or transfer to a relative. For example, a company might choose to restructure after it fails to successfully launch a new product or service, which then leaves it in a position where it cannot generate enough revenue to cover payroll and its debt payments.

As a result, depending on agreement by shareholders and creditors, the company may sell its assets, restructure its financial arrangements, issue equity to reduce debt, or file for bankruptcy as the business maintains operations.

Restructuring Process

When a company restructures internally, the operations, processes, departments, or ownership may change, enabling the business to become more integrated and profitable. Financial and legal advisors are often hired for negotiating restructuring plans. Parts of the company may be sold to investors, and a new chief executive officer (CEO) may be hired to help implement the changes.

The results may include alterations in procedures, computer systems, networks, locations, and legal issues. Because positions may overlap, jobs may be eliminated, and employees laid off.

A company undertakes a restructuring to modify the financial or operational aspect of its business, usually when faced with a financial crisis.

Restructuring can be a tumultuous, painful process as the internal and external structure of a company is adjusted and jobs are cut. But once it is completed, restructuring should result in smoother, more economically sound business operations.

After employees adjust to the new environment, the company can be in a better position for achieving its goals through greater efficiency in production; however, not all corporate restructurings end well. Sometimes, a company may need to admit defeat and begin selling or liquidating assets to pay off its creditors before permanently closing.

Restructuring costs can add up quickly for things such as reducing or eliminating product or service lines, canceling contracts, eliminating divisions, writing off assets, closing facilities, and relocating employees.

Entering a new market, adding products or services, training new employees, and buying property result in extra costs as well. New characteristics and amounts of debt often result, whether a business expands or contracts its operations.

Real-World Example

In late March 2019, Savers Inc. the largest for-profit thrift store chain in the United States reached a restructuring agreement that cut its debt load by 40% and saw it taken over by Ares Management Corp. and Crescent Capital Group LP.

The out-of-court restructuring, which was approved by the company's board of directors , includes refinancing a $700 million first-lien loan and lowering the retailer's interest costs. Under the deal, the company's existing term loan holders get paid in full, while senior noteholders swapped their debt for equity.

What Are the Different Types of Restructuring?

A business can restructure in many different ways. The different types of restructuring include legal restructuring, turnaround restructuring, cost restructuring, divestment, spin-off, repositioning restructuring, and mergers and acquisitions.

Does Restructuring Mean Layoffs?

Generally, when a company restructures, it lays off some of its employees. This is typically so because a restructuring involves downsizing, which can include closing some groups, merging others, and generally looking to become more efficient and cut costs.

How Many Times Can a Company Restructure?

There is no legal limit to how many times a company can restructure. A company can decide to change its operations as many times as it deems necessary in order to become more efficient and cut costs. That being said, restructuring is a complicated process that involves a lot of time and strategy, and so is not a process to be done lightly or often.

S&P Global Market Intelligence. " Savers Agrees to Restructuring Deal With Ares, Crescent Capital ."

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What Is Business Restructuring?

Why and How Businesses Restructure After Bankruptcy

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  • Why Does a Business Restructure?

How Restructuring Works

Business restructuring vs. liquidation.

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If a business is facing liquidation, it may opt instead for Chapter 11 bankruptcy—a type of bankruptcy that grants a debtor the space and legal protection to restructure their business and pay back creditors over time. In short, it provides a second chance. But the success of a Chapter 11 bankruptcy depends on how a business handles its critical restructuring period.

To restructure a business successfully, a debtor must make strategic, fundamental changes to the company and also have the resources to conduct major upheaval.

Historically, most successful restructures are carried out by large businesses, while small businesses have gone from bankruptcy to liquidation. However, a recently enacted federal law called the Small Business Reorganization Act (SBRA) aims to reduce restructuring costs for individuals and small firms. 

Learn how business restructuring really works and how it could help get back your business back on its feet. 

All businesses have an archetypal structure, developed as a way to establish how the organization functions to execute its goals. A company may be organized based on specialized function, with accountants in the finance department and marketers in the marketing department, for example. Or a company may be structured around business lines or divisions. 

When a company goes through restructuring, it’s organizing the system in a new way to increase the effectiveness of the operation, often changing its original structure. A restructure will likely also include reconfigurations, or more surface-level changes such as adding, splitting, transferring, or dissolving business units that don’t necessarily impact the deeper structure. 

In 1995, for example, IBM restructured its company into a back-to-front matrix, so that divisions such as technology would develop products that the front-end (marketing) team would then serve to customers. This represented a reverse of the company’s previous matrix, and the restructuring was viewed as a success.

Most restructuring under Chapter 11 includes relieving debt obligations that stifle growth, terminating unprofitable contracts, or selling unproductive assets. Delta successfully avoided Chapter 11 in 2007 in part by renegotiating its pilot contracts, for example, saving the company around $280 million annually.

Why Does a Business Restructure After Bankruptcy?

A Chapter 11 bankruptcy offers particular incentives to restructure. Per their restructuring plan, a debtor might be able to do things they couldn’t legally do during the normal course of business, such as pausing or amending debts or rejecting unprofitable contracts. 

A company may decide to restructure without the threat of bankruptcy. This may occur to keep up with shifting markets, or when a company enacts other organizational changes, such as a merger with another business. 

After filing for Chapter 11 Bankruptcy, a debtor will draw up a written disclosure statement and a restructuring plan. The plan of reorganization aims to convince creditors and the court that, upon completion of the plan, the company will achieve financial solvency. 

Plan Approval

Under the SBRA, small businesses can significantly reduce their Chapter 11 Bankruptcy costs. For example, small businesses no longer have to pay for a creditors’ committee to oversee and vote on restructuring, a historically prohibitive cost for smaller firms.  

To be considered a small business debtor, the total, noncontingent liquidated secured and unsecured debts of the organization must amount to $2,566,050 or less.

The plan approval process for a company filing Chapter 11 Bankruptcy includes the following:

  • A debtor has a 120-day period to file an exclusive restructuring plan. The court may extend this exclusivity period up to 18 months. After that period, a creditor or case trustee may file competing plans to the court.
  • The reorganization plan must demonstrate that a business will be capable of meeting all financial obligations going forward, including debts, federal income, and payroll taxes.
  • The court appoints a U.S. trustee to oversee proceedings and make sure the plan stays on track. 
  • The debtor must report balance sheets, regular earnings and profitability reports, compliance reports, and more to the court throughout the restructuring process. 
  • An automatic stay temporarily protects debtors from “all judgments, collection activities, foreclosures, and repossessions of property.”

Debt Management

In addition to implementing functional organizational changes, a company will probably include debt management in its restructuring plan. There are many programs and incentives that allow for debt management under Chapter 11:

  • Under certain conditions, a debtor can implement debtor-in-possession (DIP) financing, which means that a debtor can finance certain debt using funds that it may not have been able to previously. This debt repayment outweighs all other debt or equity.
  • A restructuring can include preparing some or all company assets for sale. Buyers won’t have to contend with typical legal liabilities (such as potential fraud), making these assets highly desirable. 
  • A restructuring enables debtors to legally void certain contracts if they cannot meet the requirements. The contractor must renegotiate or shoulder the loss.
  • A restructuring also allows for special exit financing, which helps the company emerge from bankruptcy. Exit financing could make a company more attractive to investors, since it denotes low liability and the company is actively trying to get out of debt.  

If a business doesn’t comply with its Chapter 11 restructuring plan—such as a failure to obtain financing or a failure to file monthly reports—the court will dismiss the case. The trustee may also move to file a Chapter 7 bankruptcy if the debtor does not successfully reorganize and get a debt payment plan approved, thus liquidating the debtor’s assets.

Liquidation means a trustee will convert anything of value into cash, which is used to pay creditors. 

Chapter 7 provides relief to companies, regardless of the amount of debt they owe or whether a debtor is solvent or insolvent. Unlike restructuring, much of the debtor’s property will no longer belong to them. It will be put into the hands of the trustees handling the liquidation. 

Key Takeaways

  • A business may avoid liquidation by restructuring its corporate framework and debt.
  • Companies are granted leniency during Chapter 11 restructuring, such as the ability to cancel unprofitable contracts and suspend foreclosures.
  • A restructuring plan is often a collaborative effort between debtors, creditors, an appointed U.S. trustee and the court. 
  • Chapter 11 Bankruptcies were previously unaffordable for small businesses, but the SBRA has reduced costs for these firms.

IBM. “ IBM Highlights, 1990 - 1995 ,” Page 26. Accessed March 26, 2021.

Delta News Hub. " Delta Pilots Ratify Contract ." Accessed March 26, 2021.

American Bar Association. " The Small Business Reorganization Act: Big Changes for Small Businesses ." Accessed March 26, 2021. 

United States Courts. " Chapter 11 - Bankruptcy Basics ." Accessed March 26, 2021.

IRS. " Chapter 11 Bankruptcy - Reorganization ." Accessed March 26, 2021.

Harvard Business Review. " A Primer on Restructuring Your Company’s Finances ." Accessed March 26, 2021.

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How to conduct a successful business restructure.

business plan to restructure

Domenic Calabretta

Chief executive officer & asic registered liquidator.

Changing market conditions, shifting consumer trends, and increased competition can all impact your business’s operating environment and make restructuring necessary. Business restructuring can consist of organisational and financial restructuring, with  the former focusing on employees and processes, and the latter addressing the balance sheet . When done right, a business restructure makes your business more dynamic and innovative by reorienting it to the market. Above all, it can improve your business’s profitability. Use the following strategies to guide you as you carefully plan your business restructure.

1. Avoid waiting too long

A common mistake  is waiting too long to restructure , even through the signs of trouble are there. Delaying restructuring not only reduces the options available to your business but it can also raise the risk of business failure. By acting quickly, you might be able to avoid drastic actions and end up creating more impact and value from the restructure.

2. Conduct an honest assessment

Successful restructures are based on accurate assessments , so take the time to identify what’s happening in your business. Your business might be overleveraged or it could be experiencing poor customer retention. You might be finding it a challenge to achieve profitability targets with low margins. Accurate financial statements are the best tool for determining what’s happening in your business and what’s causing your financial distress. Once you have an accurate assessment, you can refine your strategy and create a turnaround plan.

3. Review your strategy and business model

Strategic planning should inform your restructuring plan. If your business is experiencing serious challenges, your strategy and business model could be the reason. Are your products still serving your demographic, or have market preferences shifted? Is the low-margin, high-volume business model still right for you? Are you operating in an area with increased competition? Review and update your strategy and business model so you can align your restructuring plan to a new strategy that gives your business the best chance of success.

4. Look for ways to achieve quick results

If your business is in serious trouble, look for opportunities to increase sales and revenue immediately. You can continue working on medium and longer term plans, such as changing your product or service offerings, but identify ways to boost income right away. Ceasing unprofitable product lines, liquidating unused equipment, and negotiating with suppliers are easy ways to generate quick revenue boost.

5. Aim to reduce complexity

Look to  streamline your operations and structure as you implement your restructure . Complexity in your business, such as in your order processing, managers’ roles and responsibilities, or rules and levels of authorisation. can hinder performance and must be eliminated.

6. Determine your core activities and processes

If your business restructure involves restructuring roles, firstly identify the core activities in your business as you plan your turnaround. Removing duplication is vital, but you’ll want to preserve the key activities. By familiarising yourself with the top value-adding activities and the core processes, you’ll ensure no critical roles are eliminated.

7. Realistically assess workloads

Role restructures can result in overloading positions, so be realistic when you’re assessing and planning your personnel restructure. With a realistic assessment, you can avoid “heavy” or “light” roles and maximise productivity and performance in your team.

8. Match leaders with specific tasks

Your senior and line managers could be critical partners during restructuring, since they deal with your team directly. They can be drivers or they could end up slowing down progress. One thing you can do to support your leaders is to avoid overburdening them. If you give them time to focus on leadership tasks, they’ll have more time for coaching, mentoring, guiding, and engaging with staff members to support a successful restructuring.

9. Manage uncertainty and resistance

Proactively manage uncertainty and  resistance in your team through regular communication .  Clarify roles, activities, and tasks  from the beginning and anticipate resistance from specific teams, departments, or team members. If you act proactively to reduce resistance, you can pave the way for a less stressful restructure.

10. Stay flexible

Stay flexible during the restructure. Whether it’s realising elements of your restructuring plan could be updated as you implement and learn, or recognising your staff capacity could be further reduced,  avoid being locked into the mindset of a perfect organisation . Instead, approach it as if you only need to build a business that will be successful for the next 6 or 12 months. This way, you can stay flexible and responsive to change.

11. Seek expert advice

Talk to trusted experts, and keep in mind there’s a variety of professionals who can support you throughout the entire process. Whether it’s advice on turnaround finance, restructuring, or external administration, obtain advice as early as possible so you can explore your options and work to the best possible plan.

Start planning your restructure now

Business restructuring can be an essential process that helps your business evolve in response to a changing environment. It’s often a challenging, uncertain time, but with a plan aligned to your strategy, commitment to flexibility, and communication, you can give your business a chance at survival and return to profitability.

Mackay Goodwin is Australia’s leading registered insolvency practice. Our team are experts in specialist restructure, turnaround, and insolvency advice for Australian business of all sizes. Explore our full suite of services here, or  contact us today  to find out how we can can help your business recover from a difficult situation before it’s too late.

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What Is Needed for a Business Restructuring Plan?

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Business owners should periodically assess how to improve financial results. One course of action often considered is whether a business should be restructured in order to achieve required performance levels. Before pursuing this strategy, a business restructuring plan should be thoroughly evaluated. Important discussion points will normally include why restructuring might be needed, what is required and how to implement the resulting strategies.

Reasons for Corporate Restructuring

One of the most common reasons to restructure a company is the desire to prepare it for a sale, merger or employee buyout. Another common motivation involves reorganizing the business for transfer to family members. With a challenging economy, a third reason for possible restructuring is the difficulty of keeping sales results above a financial break-even point. An additional key reason to review a business reorganization is in preparation for major growth involving new products or services. In some other cases, legal and financial reasons might dictate a restructuring alternative.

Planning Ahead

The business restructuring process typically involves diagnosis, planning and implementation. The diagnosis phase is similar to a feasibility study and includes assessing a variety of possible business scenarios. The planning stage requires the formulation of detailed operational and strategic plans. Implementation will be closely tied to the business restructuring plan that was approved by business owners and all other important stakeholders. Anticipate that the diagnosis and planning parts of the process will require a minimum of several months and often more than a year.

Company Restructuring Process

Three of the most important parts in any business restructuring are the participation of corporate stakeholders, adherence to any legal restrictions and flexibility during implementation. While there are no specific laws or government regulations stipulating what needs to be included in a business restructuring plan, it is not unusual for legal challenges to occur. In particular corporate lenders and any other parties with a vested financial interest in the company likely will have questions and legal concerns regarding their involvement in the restructuring.

Implementing a New Business Plan

When a corporate restructuring plan is developed and approved, the resulting plan effectively supersedes the company’s original business plan. This is likely to be more detailed and time-sensitive than a traditional plan. One key to success is how effective business owners and managers are in adapting to changes during the implementation phase. As a business owner contemplating even the most basic restructuring plan, you should be prepared for the challenges ahead.

  • Management 360 Solutions: Business Restructuring, Restructuring Plan
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Stephen Bush is based in Ohio and has been a business finance consultant and writer for more than 30 years. Bush obtained a Master of Business Administration in management and finance at the University of California, Los Angeles.

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How To Make Restructuring Work for Your Company

The following excerpt is taken from the "Lessons of Restructuring" section of Gilson's introduction to Creating Value through Corporate Restructuring .

Although the case studies in this book span a wide range of companies, industries, and contexts, some common issues and themes emerge. Taken together, they suggest there are three critical hurdles or challenges that management faces in any restructuring program:

1. Design . What type of restructuring is appropriate for dealing with the specific challenge, problem, or opportunity that the company faces?

2. Execution . How should the restructuring process be managed and the many barriers to restructuring overcome so that as much value is created as possible?

3. Marketing . How should the restructuring be explained and portrayed to investors so that value created inside the company is fully credited to its stock price?

Failure to address any one of these challenges can cause the restructuring to fail.

Having A Business Purpose

Restructuring is more likely to be successful when managers first understand the fundamental business/strategic problem or opportunity that their company faces. At Humana Inc., which jointly operated a hospital business and a health insurance business, management decided to split the businesses apart through a corporate spin-off because it realized the businesses were strategically incompatible—the customers of one business were competitors with the other. Alternative restructuring options that were considered, including issuing tracking stock, doing a leveraged buyout, or repurchasing shares, would not have solved this underlying business problem.

Chase Manhattan Bank and Chemical Bank used their merger as an opportunity to both reduce operating costs and achieve an important strategic objective. Combining the two banks created opportunities to eliminate overlaps in such areas as back-office staff, branch offices, and computing infrastructure. Management of both banks also believed that larger and more diversified financial institutions would increasingly have a comparative advantage in attracting new business from corporate and retail customers. The merger was therefore also viewed as a vehicle for increasing top-line revenue growth. Internal cost cutting alone would not have enabled either bank to achieve this second goal.

Scott Paper's chief executive officer (CEO) decided to implement the layoffs quickly—in less than a year—to minimize workplace disruptions and gain credibility with the capital market. For some companies, however, strategic and business factors could warrant a more gradual approach to downsizing. For example, consider a firm that is shifting its strategic focus from a declining labor-intensive business to a more promising but less labor-intensive business. Ultimately this shift may necessitate downsizing the workforce. However, if the firm's current business is still profitable, the transition between businesses—and resulting layoffs—may be appropriately staged over a number of years. This situation could be said to characterize the mainframe computer industry during the 1980s, when business customers moved away from mainframes towards UNIX-based "open architecture" computing systems. 6

Knowing When To Pull The Trigger

Many companies recognize the need to restructure too late, when fewer options remain and saving the company may be more difficult. Scott Paper's new CEO was widely criticized in the news media for the magnitude of the layoffs he ordered. However, such drastic action was arguably necessary because the company had taken insufficient measures before that to address its long-standing financial problems. Some research suggests that voluntary or preemptive restructuring can generate more value than restructuring done under the imminent threat of bankruptcy or a hostile takeover. 7

Several companies featured in this book undertook major restructurings without being in a financial crisis. Compared to the rest of the U.S. airline industry, United Air Lines was in relatively strong financial condition when its employees agreed to almost $5 billion in wage and benefit reductions in 1994. And Humana was still profitable when it decided to do its spin-off.

What can be done to encourage companies to restructure sooner rather than later? In the case of United Air Lines, management in effect created a crisis that made employees more willing to compromise. Early in the negotiations, management threatened to break up the airline and lay off thousands of employees if a consensual agreement could not be reached. Management made the threat real by developing an actual restructuring plan, containing detailed financial projections and valuations. Moreover, United's CEO at the time had a reputation for following words with deeds, and he was not liked by the unions. (With hindsight, it is debatable whether he really intended to pursue the more radical restructuring plan; however, what matters is that the unions believed he would.)

In Humana's case, the company culture encouraged managers to constantly question the status quo and consider alternative ways of doing business. This sense of "organizational unease" was encouraged by Humana's CEO-founder, who twice before had shifted the company's course to a brand-new industry. As the company's integrated product strategy began to exhibit some problems—although nothing approaching a crisis—a small group of senior managers decided to investigate. This effort, which took place off-site and lasted several weeks, uncovered a serious flaw in the strategy itself, setting the stage for the eventual restructuring.

At each of these companies, there was a set of factors in place that made early action possible. However, some of these factors—a strong or visionary CEO, for example—are clearly idiosyncratic and company-specific. Thus it remains a question whether firms can be systematically encouraged to preemptively restructure. One approach that has been suggested is to increase the firm's financial leverage (so it has less of a cushion when the business begins to suffer); another is to increase senior managers' equity stake so they are directly rewarded for restructuring that enhances value. Such approaches are not widespread, however. 8

The Devil Is In The Details

The decisions that managers have to make as part of implementing a restructuring plan are often critical to whether the restructuring succeeds or fails. In the language of economics, implementation is the process of managing market imperfections. The challenges that managers face here are many and varied.

In a bankruptcy restructuring, for example, one obvious objective is to reduce the firm's overall debt load. However, cancellation of debt creates equivalent taxable income for the firm. Flagstar Companies, Inc. cut its debt by over $1 billion under a "prepackaged" bankruptcy plan. In addition, if ownership of the firm's equity changes significantly, say because creditors exchange their claims for new stock, the firm can lose the often sizable tax benefit of its net operating loss carryforwards. 9 When Continental Airlines was readying to exit from Chapter 11, it had $1.4 billion of these carryforwards. However, to finance the reorganization, the company sold a majority of its stock to a group of investors—virtually guaranteeing a large ownership change.

Companies that try to restructure out of court to avoid the high costs of a formal bankruptcy proceeding can have difficulty restructuring their public bonds. If such bonds are widely held, individual bondholders may be unwilling to make concessions, preferring to free ride off the concessions of others. Thus it will be necessary to set the terms of the restructuring to reward bondholders who participate and penalize those who do not—all the while complying with securities laws that require equal treatment of creditors holding identical claims. This was the situation facing the Loewen Group Inc. as it stood at the crossroads of bankruptcy and out-of court restructuring.

Before a company can divest a subsidiary through a tax-free spin-off, management must first decide how corporate overhead will be allocated between the subsidiary and the parent. The allocation decision can be complicated by management's understandable desire not to give away the best assets or people. It is also necessary to allocate debt between the two entities, which will generally entail some kind of refinancing. The transaction must meet certain stringent business purpose tests to qualify as tax-exempt. And if the two entities conducted business with each other before the spin-off, management must decide whether to extend this relationship through some formal contractual arrangement. Humana's two divisions transacted extensively with one another before its spin-off, and abruptly cutting these ties risked doing long-term harm to both businesses.

Corporate downsizing also presents managers with formidable challenges. In addition to deciding how many employees should be laid off, management must decide which employees to target (e.g., white collar vs. factory workers, domestic vs. foreign employees, etc.) and set a timetable for the layoffs. It must also carefully manage the company's relations with the remaining workforce and the press. This process becomes much more complicated when management's compensation is tied to the financial success of the restructuring through stock options and other incentive compensation. And when layoffs are the by-product of a corporate merger, it is necessary to decide how they will be spread over the merging companies' workforces. This decision can significantly impact the merger integration process and how the stock market values the merger, by sending employees and investors a signal about which merging company is dominant. 10

Bargaining Over The Allocation Of Value

Corporate restructuring usually requires claimholders to make significant concessions of some kind, and therefore has important distributive consequences. Restructuring affects not only the value of the firm, but also the wealth of individual claimholders. Disputes over how value should be allocated—and how claimholders should "share the pain"—arise in almost every restructuring. Many times these disputes can take a decidedly ugly turn. A key challenge for managers is to find ways to bridge or resolve such conflicts. Failure to do so means the restructuring may be delayed, or not happen, to the detriment of all parties.

Inter-claimholder conflicts played a large role in Navistar International's restructuring. The company had amassed a $2.6 billion liability for the medical expenses of retired Navistar workers and their families, which it had promised—in writing—to fully fund. This liability had grown much faster than expected, to more than five times Navistar's net worth. Claiming imminent bankruptcy, the company proposed cutting retirees' benefits by over half. With billions of dollars at stake, the negotiations were highly contentious, and an expensive legal battle was waged in several courts.

FAG Kugelfischer also faced a major battle with its employees over the division of value. Kugelfischer's high labor costs—the average German worker earned over 40 percent more than his/her U.S. counterpart—had made it increasingly difficult for it to compete in the global ball bearings market. However, opposition from the company's powerful labor unions made cutting jobs or benefits very difficult. Moreover, under the German "social contract," managers historically owed a duty to employees and other corporate stakeholders as well as to shareholders. So any attempt to cut labor expense could well have provoked a public backlash—especially since at the time the company's home city of Schweinfurt had an unemployment rate of 16 percent.

For publicly traded companies, the success of a restructuring is ultimately judged by how much it contributes to the company's market value. —Stuart Gilson

Sometimes disputes over the allocation of value arise because claimholders disagree over what the entire company is worth. In Flagstar Companies' bankruptcy, junior and senior creditors were over half a billion dollars apart in their valuations of the company. Since the restructuring plan proposed to give creditors a substantial amount of new common stock, their relative financial recoveries depended materially on what the firm, and this stock, was ultimately worth.

To bridge such disagreements over value, a deal can be structured to include an "insurance policy" that pays one party a sum tied to the future realized value of the firm. This sort of arrangement sometimes appears in mergers in the form of "earn-out provisions" and "collars." 11 The terms of United Air Lines' restructuring included a guarantee that employees would be given additional stock if the stock price subsequently increased (presumably because of their efforts). And in some bankruptcy reorganization plans, creditors are issued warrants or puts that hedge against changes in the value of the other claims they receive under the plan. 12 Despite how much sense these provisions would seem to make, however, in practice they are relatively uncommon. The reasons for this are not yet fully understood. 13

Getting The Highest Price

For publicly traded companies, the success of a restructuring is ultimately judged by how much it contributes to the company's market value. However, managers cannot take for granted that investors will fully credit the company for all of the value that has been created inside.

There are many reasons why investors may undervalue or overvalue a restructuring. Many companies have no prior experience with restructuring, so there is no precedent to guide investors. Restructurings are often exceedingly complicated. (The shareholder prospectus that described United Air Lines' proposed employee buyout contained almost 250 pages of text, exhibits, and appendices). When it filed for bankruptcy protection in Thailand, Alphatec Electronics Pcl had over 1,200 different secured and unsecured creditors, located in dozens of countries. And restructuring often produces wholesale changes in the firm's assets, business operations, and capital structure.

So in most restructurings, managers face the additional important challenge of marketing the restructuring to the capital market. The most obvious way to do this is to disclose useful information to investors and analysts that they can use to value the restructuring more accurately. 14 However, managers are often limited in what they can disclose publicly. For example, detailed data on the location of employee layoffs in a firm could benefit the firm's competitors by revealing its strengths and weaknesses in specific product and geographic markets. Disclosing such data might also further poison the company's relationship with its workforce. In its public communications with analysts, United Air Lines' management could not aggressively tout the size of the wage/benefit concessions that employees made to acquire the airline's stock, since many employees entered the buyout feeling they had overpaid.

Management's credibility obviously also matters in how its disclosures are received. Many restructurings try to improve company profitability two ways, by both reducing costs and raising revenues. Scott Paper Company's restructuring was also designed to increase the firm's revenue growth potential by leveraging the brand name value of its consumer tissue products business. Management was quite open in declaring this goal. However, experience suggests that investors and analysts generally reward promises of revenue growth much less than they do evidence of cost reductions. In public financial forecasts of the merger benefits, Chemical and Chase management downplayed the size of the potential revenue enhancements, even though privately they believed the likely benefits here were huge.

When conventional disclosure strategies are ineffective in a restructuring, sometimes more creative strategies can be devised. As part of its investor marketing effort, United Air Lines began to report a new measure of earnings—along with ordinary earnings calculated under Generally Accepted Accounting Principles (GAAP)—that excluded a large noncash charge created under the buyout structure. The new earnings measure, which corresponded more closely to cash flows, was designed to educate investors about the buyout's financial benefits. Acceptance of this accounting innovation by the investment community was uneven at first, however.

Of course communicating with investors is relatively easy when the company is nonpublic and/or closely held. But having no stock price is a double-edged sword, as the case of Donald Salter Communications Inc. illustrates, since it is then harder to give managers incentives to maximize value during the restructuring.

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Organisational Restructuring Process

Organisational restructuring requires thoughtful planning and careful implementation.

As a manager or professional, it’s crucial to have the knowledge of how to navigate the complexities associated with such restructuring projects.

In this blog post, we’ll provide you with some valuable insights into what goes into successful organisational restructuring process, from outlining objectives to executing new strategies.

We’ll also discuss key steps you need to take in order to create a streamlined and efficient transition plan for your organisation.

What is organisation restructuring?

Organisational restructuring is an essential process when a company decides to change or improve the efficiency of their existing organizational structure, often involving downsizing in the number of employees. It may include changing the composition and job roles of individuals in order to improve the overall productivity of a business.

Why do organisation need restructuring?

Organisational restructuring is an important step for businesses to ensure their continued success and efficiency. Businesses may need to restructure if their existing organisational structure is no longer able to meet their objectives or goals.

There are many benefits of organisational restructuring. For instance, it can help businesses become more efficient, increase productivity, improve customer satisfaction, reduce costs, and create a more agile organisation.

The key to successful organisational restructuring is careful planning and implementation. A well-structured plan should include objectives to be met, timelines for key milestones, and strategies to ensure the process runs smoothly.

Following are key components of organisational restricting process.

Know the reasons of restructuring

Organisational restructuring is a complex process that requires strategic thinking and planning. There must be reasons for restructuring so it should be started by asking why question like why restructuring is needed and how it will compliment business strategy. A successful restructuring plan should include clear objectives to be met, timelines for key milestones, and strategies to ensure the process runs smoothly. Therefore, all the proposed restructuring should be in line with objectives of business strategy.

Assess current situation

Before beginning the organisational restructuring process, it is important to assess the current situation and gain an understanding of what needs to be improved. This may involve conducting research, reviewing operational performance, and analysing financial records. It is also important to identify areas of potential cost savings or other organisational improvements that could be achieved through restructuring.

It is important to assess the current structure and why it is not meeting the objectives of business. This process begins with understanding the organisation’s goals and objectives, as well as evaluating its existing structure in terms of size, complexity, cost structure, resources, culture, capabilities and management.

Weigh in different options and design a new structure

The next step in the organisational restructuring process is to consider different options and select the option that best suits your organisation. It is important to understand the implications of each option, both in terms of operational efficiency and cost savings.

When evaluating different restructuring options, it is important to consider how they will impact existing processes and operations within the organisation. It is important to analyse the effect each option would have on organisational culture, morale, customer satisfaction, profitability, and other metrics. This can be achieved by studying the effects that similar organisations have experienced as a result of their restructuring decisions.

Write down new structure

Once the new structure has been designed and determined, it is important to document the new structure. This should include a clear explanation of the vertical and horizontal lines of authority, how decisions will be made, how resources will be allocated, who will be responsible for each task, and any other changes.

The new structure should be clear about the skills and expertise required for each position. It should also provide information about the distribution of functions and relationships among these functions. For example, if a company is restructuring its IT department, it should explain the roles of each individual in the IT department and how their skills and expertise will be required in new structure.

Communicate restructuring

Presenting and explaining the restructuring idea to all team members and stakeholders is crucial for the successful implementation of restructuring. It is important to inform them of the changes in an effective and timely manner. This should include details on why the restructuring has been necessary, what it will involve, how it will impact each individual within the organisation, and any other pertinent information.

Ideally, this communication should be two-way to hear the voices and feedback of employees. To ensure that everyone is aware of the changes and understand their implications, it is important to provide clear information about the restructuring process. There should be flexibility in proposed structure to make changes based on feedback given by team members, employees and stakeholders.

Manage resistance from team

It is quite natural for team members to resist the organisational restructuring process, as it can create feelings of uncertainty and fear about their current roles or future prospects within the organisation. Resistance to the new structure may manifest in various forms , such as vocalised objections, passive-aggressive behaviour, decreased performance and motivation levels, negative gossip, covet and overt, individual or group level etc.

Business leaders role is crucial in managing resistance to organisational restructuring processes. This can be accomplished by engaging with and listening to employees in order to understand their concerns, fears and objections. Business leaders should communicate the reasons behind the restructuring process, and how it will benefit the organisation and team members in the long run.

Develop an implementation plan

Implementation plan of organizational restructuring is a document which guide every team member and stakeholder about different tasks under restructuring, role and responsibilities and timeline to complete restructuring. It should also include milestones and deadlines for completion of each step of the process.

The successful implementation of any organisational restructuring process requires the involvement of all stakeholders. This includes not only those directly responsible for making decisions, but also those whose roles or tasks will be impacted by the changes.

Prepare a Budget

When preparing a budget for organisational restructuring, it is important to consider the costs associated with making changes to the structure. This includes costs related to planning and designing the new structure and implementation of restructuring.

The cost of planning and designing a new organisational structure can vary greatly depending on the complexity of the restructuring process. Generally, costs can include employee wages, consultant fees, technology expenses, legal services, and communication expenses.

Set up a dedicated team

Setting up a dedicated team is essential component of organisational restructuring process. It includes assigning role and responsibilities of each member. This helps ensure that everyone in the organisation understands their role in the new structure and how they can best contribute to achieving organisational goals. It also helps create a sense of ownership and accountability among employees.

When undergoing an organisational restructuring process, it is always recommended to have one dedicated project manager on board in order to ensure the successful delivery of the changes. This project manager should be someone who is dedicated to managing the restructuring process from beginning to end, and who can coordinate all activities related to the restructuring.

Implement a test phase

A test phase allows the organisation to trial changes and identify potential problems or issues that need to be addressed before full implementation. By running a test phase, organisations can detect any flaws in the new structure, gain feedback from stakeholders and respond quickly to any unexpected outcomes.

In this phase, it is important to assess and measure the results of the organisational restructuring process. This can be done by collecting feedback from stakeholders, as well as tracking any changes in performance or productivity levels that could have been impacted by the restructuring.

Roll out full implementation

The last step of an organisational restructuring process is to roll out full implementation. It is important to ensure that all aspects of the new structure have been successfully implemented, and that employees are properly trained on their new roles and responsibilities. This includes providing training on how to use any new technologies or tools introduced as part of the restructuring process.

It can never be a mistake-free phase so monitoring and analysis of implementation must be made to to ensure that any mistakes or problems are identified and addressed in a timely manner. The project manager should be responsible for overseeing this process and reporting back on any issues or concerns that arise during the implementation phase.

Final Words

Restructuring a business is not an easy task and involves a lot of factors. The steps mentioned in the blog post should be followed in order to ensure a successful organisational restructuring process. A test phase should be implemented before rolling out the changes to the entire organisation. This will help identify any problems that may arise and allow for adjustments to be made.

Have you undergone a business restructuring? What tips would you add to the list?

About The Author

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Tahir Abbas

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Restructure or Reconfigure?

  • Stéphane J.G. Girod
  • Samina Karim

business plan to restructure

Companies must reorganize periodically to keep pace with changes in market conditions. But executives grapple with conflicting advice about whether, when, and how to do so.

The term “reorganization” encompasses two distinct change processes: restructuring and reconfiguration. Each delivers value if pursued in the right way. Restructuring involves changing the structures around which resources and activities are grouped and coordinated—for example, function, business line, customer segment, technology platform, geography, or a matrixed combination of these. Reconfiguration involves adding, splitting, transferring, combining, or dissolving business units without modifying the company’s underlying structure.

The goals for both tend to be the same: to boost innovation and, ultimately, financial performance. But the authors’ research shows that success is almost always situational. In this article, they offer four guidelines to help companies decide which type to pursue when, how to space their reorgs, what should be reorganized, and what else needs to change in the process.

Designing the reorg that works for you

The Problem

The research.

The term “reorganization” encompasses two distinct change processes: restructuring and reconfiguration. Each delivers value if pursued in the right way. Over the past three decades, the authors have examined how each type affects organizational processes and performance.

The Recommendation

To choose the right reorganization at the right time, follow these guidelines: Tailor the reorg to your circumstances, change at the right pace, play to your strengths, and determine what other systems need to change, too.

To cope with ever-changing market conditions, companies often have to reorganize. But leaders tend to get conflicting advice about when and how to do so. Does the company need a new structure, or should it tweak the existing one? Will the benefits of a reorg outweigh the costs? Can the work be accomplished before conditions change again? How far should the changes go?

  • Stéphane J.G. Girod is a professor of strategy and international business at IMD, in Lausanne.
  • SK Samina Karim is an associate professor of entrepreneurship and innovation at Northeastern University’s D’Amore-McKim School of Business, in Boston. She is the chair of the Competitive Strategy Interest Group for the global Strategic Management Society.

business plan to restructure

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Planning for successful restructuring

What matters, and what factors determine success?

Gloomy economic prospects, higher financing requirements and an easier legal framework are likely to lead to more corporate restructurings. For a restructuring to be successful it has to have a clearly defined plan that is implemented in a skillful and focused manner by an experienced team of specialists. What matters in a restructuring plan, and what are the factors that determine its success?

MORE RESTRUCTURINGS EXPECTED

While some of the key economic indicators are suggesting that the worst of the financial crisis in Europe is over, the International Monetary Fund’s economic forecasters have just marked down Europe’s prospects yet again. They expect the euro area’s output to shrink 0.2 percent this year and to recover very slowly in 2014. Companies are increasingly talking of cost-cutting programmes, capacity adjustments and shorter working hours. In some industries, the double-dip scenario discussed when the financial crisis first erupted is already a harsh reality. The combination of gloomier economic prospects, greater uncertainty about lending and the need for companies to have more equity mean that market players are drawing up restructuring plans and thinking about how they are going to implement the measures and considerations involved.

The gloomy economic prospects and higher financing requirements can be expected to reinforce the relevance of drawing up and implementing successful restructuring plans.

The details of how each individual plan is drawn up and implemented depend on the severity of the crisis and the stakeholder structure of the company in question. It is nevertheless possible to pick out key elements that significantly increase the likelihood of operating or financial restructuring being successful.

WHAT A RESTRUCTURING PLAN NEEDS TO COVER

The law does not specify what has to be included when drawing up a restructuring plan. To set out what is expected of stakeholders (such as lending banks), anyone drawing up a restructuring plan has to bear in mind legal precedents from the highest court and guidance from professional groups.

CASE STUDY: IMPACT OF GERMAN LEGAL CHANGES

Last year saw changes in the law on the framework for restructuring companies in difficulties. The main provisions of the German Company Restructuring Facilitation Act (ESUG) came into effect on 1 March 2012. The protective shield proceedings this has introduced are a sign of the intention to focus more on restructuring viable companies and treat insolvency as a real opportunity than has previously been the case. It allows three months from filing for insolvency to draw up a restructuring plan under the supervision of a temporary administrator, during which no enforcement proceedings can be launched; this can then be implemented as an insolvency plan.

Restructuring plans typically use a modular, two-stage approach: The first stage involves drawing up operational measures to ensure viability, i.e. making sure the company is a going concern that is solvent and not over-indebted). In the second stage, the aim is to develop a model for the restructured company that ensures it is sustainably competitive and profitable (ongoing viability).

Key elements to include in a restructuring plan are:

  • A description of the subject matter and scope of the task
  • A description and analysis of the business background
  • An analysis of the causes of the crisis and the stage it has reached
  • A model for the restructured company
  • A programme of measures to be taken
  • An integrated restructuring plan
  • An assessment of whether the restructuring is viable, i.e. whether an objective consideration of the plan provides serious and well-founded prospects of a successful restructuring within a reasonable period.

DRAWING UP AND IMPLEMENTING RESTRUCTURING PLANS: KEY FACTORS FOR SUCCESS

The corporate crises that often make a restructuring plan necessary can generally be divided into strategy, success and liquidity. The content and measures included in a restructuring plan depend on the stage and extent of the crisis and the specific stakeholder structure.

Apart from meeting the (minimum) requirements mentioned for restructuring plans and allowing for specific individual features, it is possible to identify general characteristics of effective restructuring advice that significantly increases the likelihood of success:

Focus on what matters

While it is essential that the documentation and analyses mentioned are provided, care must always be taken to ensure that the focus is on information which is relevant to taking decisions and that this lies at the heart of the restructuring plan. This means specifically:

  • Providing the right degree of transparency for the people being addressed: for example, the analysis of the company’s present position must not pull any punches—operational problems or structural barriers that could impede the restructuring must be pointed out and the parameters to be met for servicing debt and equity must be made clear.
  • The strategic focus of the plan must be spelled out: what matters is not working through data about the past but answering the question of how to get a grip on the crisis and make the company viable. The central anchor has to be developing and implementing immediate operational measures and planning the model for the restructured company to make it sustainably viable.
  • There has to be a focus on action: every restructuring requires a central programme of measures setting out detailed action and specific requirements to be met in order of importance. The programme of measures is effectively the blueprint for implementing the plan and so must be compatible with it.
  • This should be summarised in a robust business plan. The results of all analyses and restructuring measures must be shown in an integrated business plan, along with their impact on the balance sheet, income statement and cash flow. The plan must be resilient, i.e. stress-tested, and provide a firm benchmark for measuring the state of progress throughout the restructuring.  

Be practical

Plans must always be designed so the objectives and action on which the programme of measures is based can be achieved and implemented within the relevant timeframe. Each measure must be based on a realistic objective. It can be an advantage if a plan is drawn up using skills and experience gained in successfully implementing other plans: an advisor skilled in implementation will generally be able either to assess relevant programmes faster and better or set priorities and make choices that improve the likelihood of successful implementation – both of which significantly increase the probability of the restructuring being a success.

Practice has shown that it is not sufficient to set out the restructuring measures proposed by the company management in a restructuring report. Their practicality and how long they will take must also be scrutinised critically. For the latter in particular, having an experienced restructuring advisor is a key advantage. Depending on the stage of the crisis, this applies to measures focused on liquidity just as much as adaptations to organisational structures and processes all the way through to setting a new focus and designing business models to give competitive advantage.

Interact with all stakeholders: the CRO as leader of the restructuring

When it comes to implementing the recommendations made in a restructuring report, stakeholders often insist on appointing a Chief Restructuring Officer (CRO). The CRO position is that of an interim manager and normally brings together all the tasks involved in total crisis management, from implementing structural and operational measures to negotiating refinancing. An experienced CRO can relieve the burden on managers who are often not specialists in this area. The CRO also takes on managing the restructuring process and coordinates and communicates with all relevant stakeholders. The greatest impact often comes from being directly responsible for implementing the crisis measures and acting as an honest broker on behalf of all interest groups.

Skilled restructuring management that uses an advisor who can get things done to ensure the measures in the plan are carried out, involves all relevant stakeholders, creates transparency and regains trust and security, is a key driver when it comes to successfully restructuring a company going through a crisis. The more closely a restructuring is focused on the key issues for survival, and the more realistic the measures chosen when drawing up the plan, the greater the chances of success. It is no use drawing up the right plan for a crisis and making the right recommendations for action unless liquidity can be generated, debt serviced on time and cost cutting implemented. Efficiency improvements also have to be clearly felt in improved cash flow and profitability. Appointing a temporary CRO can be an important aid in this.

business plan to restructure

  • Business Restructuring

What is a Restructuring Plan and when would you use one?

Since the start of last year, some businesses will inevitably have accumulated high levels of debt in order to survive. Debt and consequent repayments can put enormous pressure on cash flow and in some cases, the viability of a business. If this is a situation you recognise, there are various options available. This article explores just one of those, known as a ‘Restructuring Plan’.

Last year saw the introduction of a Restructuring Plan by the Corporate Insolvency & Governance Act 2020. It is not as well-known as other formal compromise arrangement options such as Company Voluntary Arrangements (CVAs) or Schemes of Arrangement. All such compromise arrangements can be used in isolation or in tandem with other tools, for example to create a moratorium against creditor enforcement.

A Restructuring Plan has so far only been used on a handful of occasions but are nevertheless a useful restructuring tool and may be the right option for your business.

What is a Restructuring Plan and how is it different?

A Restructuring Plan is a formal arrangement between a company and its creditors and/or its shareholders. It may be used by companies facing financial difficulties that are capable of being rescued as a going concern (there is no need to wait for imminent insolvency).

A Restructuring Plan may take many forms including:

  • A compromise in the amount of the debt
  • A debt for equity swap
  • Resetting of covenants
  • Rescheduling debt repayments. 

The terms of each Restructuring Plan can be tailored to the relevant circumstances.

A Restructuring Plan is subject to approval by creditors formed into classes with similar characteristics/interests, but those classes of creditors that are ‘out of the money’ (i.e., which would have no economic interest in the company were the plan not approved) may be excluded if approved by the Court. The plan must be sanctioned by the Court.

Even ‘in the money’ classes of creditors can be compromised by such a plan, as long as they receive more than they would receive if the plan were not approved and at least one class of creditor approves the plan. That approving class must be one with an underlying economic interest were the plan not approved.

This latter mechanism has become known as a ‘cross-class cram-down’ and is one of the most powerful aspects of a Restructuring Plan. The underlying intention is to ensure that those creditors with the true economic interests are able rationally to approve such plans, without ‘holdouts’ from out of the money creditors scuppering such a plan. This feature is what distinguishes the Restructuring Plan from CVAs and Schemes of Arrangement, as well as informal restructuring approaches.

What are the benefits of a Restructuring Plan?

In situations such as compromising of debt burden , a Restructuring Plan enables a company to restructure its balance sheet and hence release working capital into the business. A Restructuring Plan may also provide a sustainable platform from which new monies (whether debt or equity) can be injected into the company to fund future operations and growth rather than the repayment of existing debt.

Situations when you might use a Restructuring Plan

  • Directors will likely use a Restructuring Plan to restructure a balance sheet where the underlying business is viable but for the existing debt burden
  • The plan will likely be focused on a particular debt or category of contracts where the terms are particularly onerous. The rationale is that the company would be solvent if the specific debt or contracts could be restructured. This has already been seen in relation to the categorisation and restructuring of property leases. However, this may equally apply where there is one particular contract that is so onerous as to impact upon the solvency of an otherwise viable company. As mentioned above, a Restructuring Plan does not necessarily need to be approved by all of the creditors but only those that currently hold a vested economic interest in the company. So, such a plan may also be a useful option when dissenting creditors that are not ‘in the money’ are preventing a consensual restructuring or other formal compromise arrangement. Because the creditors do not vote together, but in classes, even large individual debts cannot block a Restructuring Plan where the relevant conditions are met
  • While the underlying basis of a Restructuring Plan will likely be the compromise or restructuring of the debt, it may also provide a sustainable platform for the injection of new monies into the company for the future. As such, a Restructuring Plan may well be an appropriate option where a shareholder or debt provider wishes to retain control/primary security and is prepared to extend further funding to the business but only on the basis that such funding is used for the future benefit of the business and not used to fund the payment of historic liabilities
  • A Restructuring Plan may also be used to deal with an underperforming division of a group in a wider group needs to be wound down in a controlled manner in order to minimise the impact on the remaining companies within the group.

However, each situation will have its own facts and circumstances and a Restructuring Plan can be shaped to each one as needed.

The timing of a Restructuring Plan

The final point to note is that a Restructuring Plan will take time to negotiate, document and implement. You must ensure you start the Restructuring Plan process while you still have the time to agree and implement the plan. Indeed, this is the intention behind the introduction by the government of this procedure.

For a confidential conversation on whether a Restructuring Plan may be right for your business, please get in touch with Neville Side  or  Lee Causer who will be happy to help.

You may also be interested in reading our 9 things you need to do if cash is under pressure in your business and Can your business manage its debt burden?

business plan to restructure

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6 steps to restructuring a business successfully

Home » 6 steps to restructuring a business successfully

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  • April 27, 2023

A business may face tough times during its life cycle and you may need to act quickly in making difficult decisions in order to survive. A practical way for businesses to adapt to a changing environment is through an effective restructure. Business restructuring is a flexible concept and there are many reasons for doing so.

About Goughs: We strive to be your trusted business adviser ensuring we are at the forefront ready to provide the right advice at the right time. Our team of corporate law solicitors can support your business with corporate restructuring services , preparing company constitutional documents , commercial contract law and so much more. 

Topics to be answered in this article

1. Decide what you are trying to achieve with the restructure

2. understand your finances and where you are right now, 3. seek the input of key staff and stakeholders, 4. decide the new structure, 5. communicate the plan internally and externally, 6. monitor and be prepared to adjust, how can goughs help.

A number of situations may prompt a business to consider a restructure. These include:

  • Downsizing or expansion;
  • Relocation;
  • Management changes;
  • Ownership changes;
  • Raising funding; 
  • Planning business closure or exit from the market.

Organisational, asset or financial restructuring are effective ways to implement these changes which can increase the profitability and efficiency of a business. It is important to consider what the desired outcome would be and its implications before embarking on any restructuring.

If your business’ finances are in difficulty, restructuring is an effective way to improve the position of the business. 

The cash position of the business will affect the choice of route taken for the reorganisation. You may wish to consider the business overheads and decide what your essential and non-essential costs are. You should also look at what assets your business has. If your business is downsizing you might consider outsourcing, for example. You might also consider leasing a smaller premises. You could re-assess your staff organogram, with a view to making changes in the workforce. Of course, when considering any redundancy process there will be legal considerations which carry their own costs and complications.

When done strategically and legally, restructuring of a business can be an effective means of streamlining.

Communication is the key and it is important to have an effective consultation process with those impacted. 

This could include group consultations and individual consultations with management and any shareholders. Should you be considering any redundancies then you must consult all other staff affected in a similar manner. If your business has union recognition, it is imperative that you engage with the union, especially if there are collective agreements in place. Also, the number of staff who may be affected by the restructure may trigger prescribed periods for consultation. You may find that input from those affected provides valuable opinion and information to consider.

With the above in mind, you should be able to decide exactly how your business should be restructured and how to go about this. In most cases, any changes to a business will require input from corporate, commercial and employment lawyers who will provide you with the means to achieve your desired outcome and considering the advantages and disadvantages of any new structure. You should also consult financial advisors if appropriate.

Communication is the key to a smooth restructure. Engaging with staff openly and honestly will help avoid any potential problems that may arise further down the line. In a redundancy situation, there are a number of stages involved. These include selection, consultation and considering suitable alternative employment. It is best practice to consider these even in the case of a full business closure. For bigger scale redundancies, a failure to collectively consult can lead to penalties. This is a delicate and complex process which is why we highly recommend a business takes quality legal advice. 

External communication is also important to consider, particularly when there will be a significant number of redundancies taking place. Failure to do so could result in bad press and a loss of business. Businesses who have openly explained the reasoning behind a restructure on a large scale often avoid heavy criticism by the general public.

 Keeping an open line of communication with staff affected and monitoring the situation as it progresses will instil trust in your business and the process. You must prepare to be flexible and adjust where necessary, be alive to all outcomes and expect some negativity towards change. If all of the above steps are followed and the restructure process is managed with the correct consideration for all parties affected, it can provide future opportunities for both the business and its staff.

We have a dedicated and experienced team of Corporate and Commercial lawyers who can provide specialist advice on the restructure of your business . They will work closely with our Employment team regarding any staff changes to consider.

Harriet Pestille

I joined Goughs in September 2022 as a Trainee Solicitor.

Prior to Goughs, I worked as an Assistant Company Secretary for three years then completed the Graduate Diploma in Law before working as a Paralegal in both Education and Private Client whilst studying the Legal Practice Course on a part-time basis.

Having done my initial degree in History of Art, I switched to the legal sector because I enjoy providing solutions to problems and helping people in a practical way. Being a solicitor will enable me to do so in a professional capacity.

I am currently on my third seat in the Residential Property department and I am excited to continue my professional and personal development with Goughs.

In my spare time I enjoy baking for friends and family, going to the gym and exploring the local area. My friendly cat Bruce also keeps me busy.

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restructuring your team

7 templates for restructuring your team

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For your business to grow, you have to be willing to make changes. Without embracing change, you might miss out on new technologies and better processes that can help you to keep up with or ahead of your competition.

Sometimes a change might be as small as streamlining a procedure. And sometimes you might require more drastic changes like restructuring teams or entire organizations. In theory, restructuring can make your teams more streamlined and efficient, which can lead to happier customers and increased revenue.

In this blog post, we discuss seven templates that can help you as you work to restructure your team.

Basic org chart

An org chart can be as simple or complex as you want. Simple boxes and connecting lines give you basic information such as employee name, email, phone number, team association, direct reports, and so on. You can make your charts more useful by adding photos, a list of skills, links to communication apps such as email and chat, location maps, and more.

org chart

Roles and responsibilities framework

A roles and responsibilities framework is similar to an organizational chart. The roles are displayed in a hierarchical chart with the names (and pictures if possible) of the people assigned to each role. To the side of the chart, the responsibilities of each role are listed.

roles and responsibilities

Flat org chart

A flat org chart lets you visualize the reporting structure of companies that have few or no levels between employees and upper management. This usually can be seen in startups and small companies. 

A flat structure puts all employees on a more level playing field. So employees generally work with little supervision, have a higher level of responsibility, and are expected to help in making important decisions.

flat org chart

Location-based org chart

This type of org chart is useful for large organizations with employees distributed in various locations and time zones. Creating and maintaining a location-based org chart lets you visualize the hierarchy and reporting structure for individuals and teams no matter where they are located.

You might want to use a location-based org chart when you need to create national or global teams. By knowing the time zones that team members are located in, it’s easier for team leads to schedule virtual meetings where everybody can collaborate together.

location based org chart

Org chart by growth track

A growth track can help your employees to understand the path and timeline they need to follow to achieve their career goals. When your employees understand that there is real potential for growth in the company, it’s easier to retain them so they don’t go looking for opportunities outside of your business. 

When you create org charts based on employee growth plans , you should have a better understanding of how to restructure a team or an organization based on individual goals and ambitions.

org chart

Org chart by cross-functional teams

An org chart by cross-functional teams gives you a visual overview of team member reporting structures. For example, each team member might report to at least a project lead as well as the head of their own functional division. Using this type of org chart to restructure can help you to understand who to contact when you need to request new team members from other departments and divisions.

org chart

Inverted org chart

The inverted org chart puts the employees at the top and the company leaders at the bottom. This type of organizational structure encourages managers and leaders to support employees and the broader organization rather than approach work to be done top-down.

org chart

Explore thousands of other templates for every use case.

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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4 Types of Business Bankruptcy (and How to Restructure)

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As a business owner, there are very few things more unsettling to consider than shutting down your business or filing bankruptcy. The US Bureau of Labor Statistics (BLS) finds that 20% of new businesses fail during the first two years, 45% during the first five, and 65% during the first 10. Only 25% of new businesses make it to 15 years or older.

These are sobering statistics, to be certain. However, filing for bankruptcy does not necessarily have to spell the end of your business. Similarly, many businesses that do close never pursue bankruptcy. Typically, most businesses that file bankruptcy do so due to overwhelming debt. There is a bright side to all this: some businesses are able to save themselves by renegotiating untenable debt situations and essentially ‘starting fresh.’

What Is Business Restructuring?

Restructuring is the reorganization of your systems and debts in a new way to increase the efficiency of operations. Sometimes, this may include changing the original structure entirely. Restructuring could also mean adding or dissolving business units that do not necessarily affect the entire structure.

Under several bankruptcy chapters, you can reorganize your business and continue operations as usual. So, which kinds of bankruptcy allow and do not allow business restructuring? Below, we will explain the four types and how you can restructure accordingly.

  • Chapter 11 Bankruptcy

Chapter 11 Bankruptcy is the most common type that corporations, partnerships, and sole proprietors choose when they have a realistic chance of getting back on track. This usually means the business or consumer has significant assets or a viable repayment plan that would convince the creditors and the court of a solid reorganization and repayment plan.

In fact, Chapter 11 is known for being the reorganization bankruptcy chapter. It gives business owners the opportunity to pay back the creditors over time, all while remaining open and continuing operations. Your bankruptcy lawyer will walk you through this long-term plan to make sure all the documents are submitted, keep everything organized, and prepare for court hearings.

The restructuring process for Chapter 11 bankruptcy includes the following:

  • The debtor submits assets, liabilities, balance sheets, reports showing profits and regular earnings, expenditures, contracts, and leases to the bankruptcy court as leverage for the reconstruction plan.
  • In the restructuring plan, the debtor describes how they will repay the creditors and meet other financial obligations such as payroll and other taxes.
  • The creditors review the plan and vote to approve it.
  • Then, the court can approve the restructuring plan, and the debtor can begin implementing it.
  • The debtor starts reorganizing the business by paying the creditors with the profits they continue to generate. The business owner can also renegotiate or void contracts that show a potential loss, sell off assets if necessary, and otherwise work to balance income and expenses.
  • Also, the debtor may be discharged of debts when the court has approved the reconstruction plan.
  • Chapter 7 Bankruptcy

On the other hand, if a business or sole proprietor does not show potential to survive, the debtor could file under Chapter 7 Bankruptcy. This type is known as liquidation. In this case, the business or individual has debts that can no longer be restructured, and they usually lack the assets to even begin the process.

Instead, the court appoints a trustee to convert the company assets or anything of value into cash, and then the money is distributed among the creditors. Also, under Chapter 7 bankruptcy, sole proprietors can be discharged of remaining liability on the debts. However, corporations and partnerships are not eligible for this discharge in a Chapter 7 case.

  • Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is known as the reorganization form for consumers and some sole proprietors. Under this type, individuals who earn a regular income can get on a repayment plan. The amount the individual would have to repay depends on their revenue, debts, and property.

The restructuring process for Chapter 13 bankruptcy includes the following:

  • Similar to Chapter 11 bankruptcy, the debtor would have to get their repayment plan approved by the court. The business owner can also continue to operate while in repayment.
  • In contrast to Chapter 7, the individual does not have to hand over their property and assets to the trustee.
  • Once the court approves the repayment plan, the creditors can no longer pursue a lawsuit against the debtor, and the creditors have full protection.
  • The repayment plan can extend over several years.
  • After the reorganization plan is complete, the individual is discharged from all remaining debts.

Chapter 12 Bankruptcy

Chapter 12 Bankruptcy is an option available to small farming or fishing companies. Essentially, this bankruptcy type is a restructuring framework for these types of family businesses to avoid liquidation.

The restructuring process for Chapter 12 bankruptcy includes the following:

  • The business has 90 days to develop a repayment plan, and sometimes the deadline can be extended.
  • The business owner can pay off their debts over 3 to 5 years.
  • Their businesses can continue operations as usual.
  • The court will appoint a trustee, but their duties are generally restricted to checking documents, monitoring the business operations, debt collection, and disbursing to the creditors.

Local Legal Representation For Bankruptcy

Each type of business bankruptcy carries its own set of challenges and complexities in determining whose business is eligible and what their course of action should be. However, bankruptcy is not a permanent stain on your credit score, nor is it a death sentence to every business. With the right legal representation by your side, you can decide upon the best bankruptcy option based on the needs of your business.

No matter the type of bankruptcy your organization requires, a bankruptcy lawyer would help navigate, advise, and assist from the initial filing through the restructuring process. Our bankruptcy lawyers would be there to support and counsel you on all procedures so that you can decrease financial risks and recover successfully. Contact us today to discuss restructuring your Idaho business through a bankruptcy case.

  • Bankruptcy Lawyer
  • Business Bankruptcy

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Business owners should periodically assess how to improve financial results. One course of action often considered is whether a business should be restructured in order to achieve required performance levels. Before pursuing this strategy, a business reorganization plan should be thoroughly evaluated. Important discussion points will normally include why restructuring might be needed, what is required and how to implement the resulting strategies.

One of the most common reasons to restructure a company is the desire to prepare it for a sale, merger or employee buyout. Another common motivation involves reorganizing the business for transfer to family members. With a challenging economy, a third reason for possible restructuring is the difficulty of keeping sales results above a financial break-even point. An additional key reason to review a business reorganization is in preparation for major growth involving new products or services. In some other cases, legal and financial reasons might dictate a restructuring alternative.

The business restructuring process typically involves diagnosis, planning and implementation. The diagnosis phase is similar to a feasibility study and includes assessing a variety of possible business scenarios. The planning stage requires the formulation of detailed operational and strategic plans. Implementation will be closely tied to the business restructuring plan that was approved by business owners and all other important stakeholders. Anticipate that the diagnosis and planning parts of the process will require a minimum of several months and often more than a year.

When a reorganization plan is developed and approved, the resulting plan effectively supersedes the company’s original business plan. This is likely to be more detailed and time-sensitive than a traditional plan. One key to success is how effective business owners and managers are in adapting to changes during the implementation phase. 

This template will be primarily useful for company leaders when preparing a company’s development strategy. You can describe in detail all stages of the implementation of your strategy and define the responsible persons and indicators to measure the effectiveness of the work.

Also, this template will be useful for startups when preparing for a meeting with business angels or investment funds. You can describe a plan of action to reorganize the work of the company and indicate the required funds and the payback period of the investment.

Crisis managers can use the slides of this template when preparing to reorganize unprofitable businesses and to implement measures to increase profits. University professors can use the slides in this template to prepare courses on business restructuring or business planning in a crisis.

Also, this template can be used by engineers when drawing up a plan for reorganizing production lines and creating modern high-tech automated systems.

Business Reorganization Plan is a professional and modern template that contains seven stylish and fully editable slides. If necessary, you can change all the elements of the slide in accordance with your corporate requirements. This template will be useful for startups, company executives, crisis managers, financial analysts. The Business Reorganization Plan template will organically complement your presentations and will be a great addition to your collection of professional presentations.

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Go to homepage business.govt.nz business.govt.nz

Business.govt.nz, in association with, what to do when restructuring your business.

Businesses need the right roles and structure to operate at their best. As your business develops and your market changes, the right roles and structure might change too.

Restructuring can be difficult for everyone involved, but it should be easier if you follow the process and act in good faith.

Why restructure

It’s important to regularly check that your business is structured the best way for success. Having the right roles structured the right way means you can meet the needs of your customers and take your business to the next level.

If things have changed and you think a new structure could improve the way your business operates, you might want to investigate restructuring. This doesn’t necessarily mean making employees redundant (though that could happen) but it might mean peoples’ roles change. Please note that employment laws protect some groups of employees in certain restructuring situations.

Restructuring can involve:

  • adding new roles
  • merging two or more existing roles
  • losing roles that are surplus to requirements
  • a combination of these things.

Restructuring when a business is sold or transferred (external link) — Employment New Zealand

Employment protection provision (external link) — Employment Agreement Builder

Employment laws protect some groups of employees, eg cleaning, catering and laundry staff, in certain restructuring situations.

For details, see Restructuring when a business is sold or transferred (external link)  — Employment New Zealand

When restructuring isn’t the right option

Restructuring is about making sure you have the right roles to deliver to your customers and your strategy — it’s not a way to manage individual employee performance issues.

If you’re having an issue with an employee’s performance, you can’t ‘restructure’ to get rid of them — you need to manage their performance  through the proper channels.

If you’re restructuring, you need to have a genuine business reason — otherwise you could face personal grievance cases.

Genuine business reasons

You need a genuine business reason to restructure your business. You’ll need to state this clearly as you go through the process.

Genuine reasons include:

  • realignment of brand
  • changing your product or service offerings
  • financial issues resulting in the need to downsize or realign
  • no longer using a department
  • wanting to outsource certain business functions
  • merging with another business.

Restructuring done right

Bill found demands on his IT consultancy business were changing. His customers no longer wanted to learn how to fix their own computer problems. So Bill decided to restructure to respond to his market’s needs, with fewer trainers and more technicians.

Bill documented his proposal explaining the market drivers and indicating which jobs would go or substantially change. He set out the proposed new structure, and indicated roles that were new.

When he shared this with his team, they were able to understand that Bill had good business reasons. They also had the information they needed to help him shape the new structure to be the best it could be. 

How to restructure — the principles

If a restructure might impact people’s jobs, there’s a process you need to follow. As with anything involving employee relations, it’s underpinned by the principle of ‘good faith’ — meaning you and your employees act fairly in your dealings with each other.

This means you:

  • are communicative and responsive
  • don’t mislead or deceive one another
  • are active and constructive in establishing and maintaining a productive relationship.

During a restructure, ‘good faith’ means that employees who might be affected have the right to comment on and feed into the restructure. When you propose the new structure, you need to genuinely consider any feedback, including their thoughts and suggestions.

Throughout the restructuring process you can keep some information confidential — but there has to be a good reason. Examples include:

  • following statutory confidentiality requirements
  • protecting your employees’ privacy
  • protecting your business’s commercial position.

Redeployment and downsizing

There are specific rules on redeployment — when you create a new role that isn’t substantively different from an old role. In that case, you must redeploy a person in the current role to the new one. This is a technical area, and legal advice might be valuable.

There are also specific rules on downsizing, when you’re reducing the number of a certain type of existing role. For example, if you currently have three junior hairdressers, but you think you only need one, you’ll need to set out specific details in the proposal, including the selection criteria for how you’ll choose the successful individual. If you’re not familiar with these rules and process, you should get help from an expert. This is a technical area, and legal advice might be valuable.

Restructuring done wrong

To cut costs in her hairdressing business, Jane proposed a restructure to cut 10% of her wage costs by replacing a senior stylist with a junior stylist.

Her staff suggested other ways to reduce costs, but she felt that they would not make enough difference and made senior stylist Alan redundant.

The savings on wages equated to 6%, not 10% as Jane’s proposal stated. When she confirmed the new structure, she didn’t state why she was rejecting the alternative measures suggested by her staff.

Alan took a personal grievance case to the Employment Court. The court upheld his claim as Jane had not genuinely considered her employees’ feedback and there was not enough justification to have made Alan redundant.

How to restructure — the step-by-step process

Use the task list at the top of this page to make sure you follow the correct process. It will also provide a record of what's happened.

Step 1. Document your proposal

You need to put your proposal in writing, so you can communicate it to your team.

Your proposal needs to talk about roles, not people. It needs to clearly state the reason for the restructure, and the expected benefit — though you can keep the details high level.

You need to clearly explain:

  • your genuine business need to restructure
  • what you propose the new structure to be
  • how that will impact the current structure
  • roles that are being disestablished or substantially changed in this proposed restructure.

If you include specific facts, like how much money you need to cut from the business, you need to make sure those facts are right. You have to be able to back up what you’re saying if you’re asked in a grievance process.

Step 2. Invite people to a meeting

Email or write to your employees, letting them know you’re proposing a restructure and inviting them to a meeting to hear about it.

  • Advise and invite people whose roles might be affected (but you might want to include your whole team).
  • Let people bring a support person or representative to the meeting, and tell them they can in the invitation.
  • Leave enough time between the invitation and the meeting date so they can digest the news and get support in place, but not so much time it leaves them hanging. Two or three working days will be about right.

Step 3. Hold the meeting

The meeting can be with everyone at once. It can be informal.

In the meeting, you should talk through your proposal and give your expectations on timeframes. You should:

  • Talk them through the proposal document, and provide the proposal as a handout.
  • Outline the process you’ll be going through to determine the restructure, and provide the process in a handout.
  • Set expectations regarding timeframes for the process, and provide timeframes in a handout
  • Be clear on the roles affected under your proposal.
  • State that anyone can provide written feedback to you, or request a private meeting to give feedback, and they may bring a support person or representative to that meeting (they’ll need to tell you they want a meeting, so you can schedule it in).

Workplace change (external link) — Employment New Zealand

Step 4. Gather feedback

Your employees can submit feedback in written form or in meetings with you. It’s important you consider what they have to say about your proposal.

Give them enough time after the proposal meeting to digest your proposal, think of suggestions and get support, before you close feedback — but not so much time that it leaves them hanging.

The feedback process will usually be for at least a week (especially if there is a chance an employee will lose their employment).

Step 5. Genuinely consider the feedback

You must genuinely consider feedback you’ve received, and whether you’d benefit from a different structure than you proposed. This process takes time — leave yourself at least a couple of days after closing feedback for consideration. 

If you still think your original proposal is best, go to Step 6. 

If you want to change your proposal, you should go back to Step 1. This is particularly important if your new proposed structure affects different roles. 

Step 6. Confirm the structure

This step assumes you’re happy with your proposed structure — if you’ve made changes to your original proposal, you need to go back to Step 1.

You must provide the outcome of your consideration in writing, to the affected people. You need to:

  • Confirm that the proposed structure will be the new structure.
  • Outline the feedback you considered, and your decision regarding that feedback.
  • Be clear about the affected roles and what this means, including details of follow-up meetings and a notice period if relevant.
  • Offer to have individual meetings to discuss the outcome.

If you’re making roles redundant, steps 6 and 7 will be different.

See our Redundancy page for what to do when an employee’s job is no longer needed.

Redundancy page  

Step 7. Meet to discuss what next, if required

Schedule and hold meetings with affected employees to discuss next steps. Give them the option to have a support person or representative at the meeting, and enough time to organise them to come.

When dealing with downsizing and redeployment, legal advice might be valuable.

Alternative steps if you can’t meet face-to-face

It’s best practice to follow a face-to-face process for restructuring. But if a meeting is going to be hard for you — logistically or emotionally — you can follow a written process for some steps. 

In that case:

  • At Step 2, send an email giving them a heads-up that a proposal for restructuring will be sent to them on a certain date.
  • Instead of Step 3, send them the proposal on that date, along with the steps and timelines for going through the process.

Leave enough time between sending the email and the proposal that they have chance to digest the news and get support in place, but not so much time that it leaves them hanging.

Common mistakes

To reduce the risk of a personal grievance, don’t fall into these common traps:

  • Treating the proposal as a done deal before you’ve heard and considered feedback.
  • Leaving too little time between stages — your employees need time to consider things and arrange support.
  • Not being clear about what the proposed structure is.
  • Giving out confidential information, or refusing to give out information that you should disclose.

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How to plan a company restructure

by bespokehr | Oct 7, 2020 | Articles

Blog header

Planning a company restructure can have a significant impact on your employees, and if not done correctly, could put you at risk of an employment tribunal. It’s important to follow the correct procedure if you need to reorganise the business. What should you consider?

Make sure you have a genuine commercial reason to restructure.

If your company restructure plans will affect jobs then you must ensure you have a commercial reason which is justifiable. These can include the business losing money and needing to cut costs, or that you need to refocus your efforts on a different market or sector. Whatever the reason, if taken to an employment tribunal, you would need to justify the legitimate reasons and would need evidence to support this.

Never base a restructure around performance issues

This includes a team member who is underperforming or isn’t working well within the business. This is classed as performance management and would not be deemed as a justifiable reason to restructure. Read our guide to managing poor performance.

Communicate with employees

To most important element of a restructure is to communicate effectively with staff. This means informing them of the proposed changes and including them in feedback, factoring this into any final decisions. They should be given the opportunity to provide meaningful feedback with access to all the information required.

You can withhold some sensitive information, for example, the salaries of other employees. However, by law, if it’s relevant to the decision-making process then you are required to share it. You must also include any criteria or tools you will use to assess team members for new positions or redundancies and allow them the opportunity to comment. Transparency is key.

Reach an outcome collectively

It could be tempting to shortcut the consultation process, but it’s not worth the risk. A restructure is only a proposal until employees have the chance to give their feedback and the business has genuinely taken it into consideration. You are duty-bound to take employee feedback on board, but it also may have a positive impact on the outcome.

Allow enough time to respond

Part of providing a fair and transparent process is also allowing enough time for consultation and feedback. Any proposed restructure could have a detrimental effect on staff and they will need time to reflect and digest this information before offering an opinion.

Unless the proposed changes are in response to an emergency, it’s recommended that you start with at least two days between announcing changes and asking for responses.

If your staff ask for more time it’s advisable to give them that. Up to two weeks is considered reasonable in this situation.

Take everyone thoughout the process

The law states that you must consult with everyone whose job could be affected by the proposed restructuring. Even if you know which members of the team are likely to stay / or change, you will need to consult with all who will be impacted. Excluding people could open you up to a personal grievance.

Always refer to the employment contract

Always check contracts before proposing any structural changes. Look at job descriptions, notice periods and compensation in case of redundancy. This is also why it’s essential to keep all job descriptions up to date and adapt if you’re changing any staff duties. Read our guidance on what to include in an employment contract.

Stay fair and transparent

Use a selection matrix to be fair and transparent. Whilst there are many ways to select employees to new or remaining roles, this should always be done with transparency.

Use a selection matrix to ensure your decisions are fair. This will map out:

  • Key competencies
  • Experience for the role
  • Assess against the criteria
  • Selecting the highest-scoring employees

The employee should also then be given a copy of the matrix and criteria. They should be allowed an opportunity to comment and their feedback considered before making any final decision.

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  • UK Company Restructuring Plans: What Is Next After Adler?

K&L Gates LLP

The England and Wales Court of Appeal recently handed down its first judgment relating to a restructuring plan under Part 26A of the UK Companies Act 2006: Re AGPS Bondco Plc [2024] EWCA Civ 24. Restructuring plans were a 2020 innovation in UK insolvency law, as described in our earlier alert . At first instance, the judge had exercised his discretion to sanction the restructuring plan and effected a cross-class cramdown (CCCD) of creditors. The appeal against the first instance decision was made by dissenting creditors and was allowed by the Court of Appeal. The lead judgment of Lord Justice Richard Snowden will inform debtors, noteholders, trustees and other participants in financial structures or restructurings when formulating or responding to Part 26A plans. However, uncertainties remain.

In the autumn of 2022, the Adler Group (the Group), the owner of a large portfolio of residential real estate in Germany, was facing significant financial difficulties. The Group’s indebtedness included a series of senior unsecured notes (the Notes) issued by Adler Group SA (the Parent Company), a Luxembourg company. The six series of the Notes had a range of maturity dates from 2024 to 2029, and each series ranked equally.

The Group proposed a controlled wind down of its business with a view to achieving better realisations than in an immediate formal insolvency process. The proposals included an injection of new money, with the new money providers receiving 22.5% of the equity in the Parent Company, the extension of the maturity dates of the 2024 Notes by a year, and the modification of the negative pledge clauses in the Notes. This modification was to facilitate an amendment of the enforcement waterfall, with the new money ranking first followed by the 2024 Notes and with the remaining series of Notes ranking junior to the 2024 Notes.

The proposed alteration of the terms and conditions of the Notes was to be implemented by a consent solicitation process. However, there was a failure to achieve the requisite majority in relation to the 2029 Notes. The Group proposed a UK restructuring plan (the Plan). AGPS Bondco PLC (the plan company) was incorporated in England and Wales and substituted for the Parent Company as the Issuer of the Notes in order to engage the jurisdiction of the English Court (the Issuer Substitution).

At separate class meetings of the holders of each series of Notes (each, a Plan Meeting), the Plan was approved by majorities in excess of 75% of those voting at each Plan Meeting, save for the meeting of the 2029 Notes, which fell short of the required 75% majority. At the sanction hearing, the first instance court was satisfied that: (A) none of the members of the dissenting class would be any worse off if the Plan were sanctioned than in the relevant alternative (in this case, a formal insolvency process), and (B) the Plan had been approved by a class that would receive a payment or have a genuine economic interest in the company in the event of the relevant alternative. The judge at first instance determined that conditions A and B were met and exercised his discretion to sanction the Plan. Dissenting 2029 noteholders appealed. 

Key Considerations Arising From the Court of Appeal’s Judgment

Discretion to sanction a plan where cccd is not engaged.

The established principles guiding a court in the exercise of its discretion to sanction a scheme of arrangement (under Part 26 of the UK Companies Act 2006) apply in relation to a restructuring plan where there is no requirement for CCCD.

The court must consider: (i) whether the provisions of the legislation (including questions of class composition, whether statutory majorities were obtained, and the adequacy of the explanatory statement) have been met, (ii) whether the class was fairly represented at the meeting and without coercion of the minority by the majority to promote interests adverse to the class, (iii) whether it is a fair plan that an intelligent and honest creditor could reasonably approve (the rationality test), and (iv) whether there is any defect that would make the plan unlawful or otherwise inoperable. The court does not need to establish whether the scheme is the only fair scheme or the best scheme.

Discretion to Sanction a Plan Where CCCD is Engaged

Where the court is being asked to impose a restructuring plan upon a dissenting class, the approach under Part 26 continues to apply but requires modification. The court has to be satisfied in regard to each assenting class that those who attended and voted in favour were a true reflection of the class as a whole (which might not be the case if turnout were very low) and that the majority had not voted to coerce the minority. This is of particular importance when the court is considering the class with a genuine economic interest whose affirmative vote is relied upon to satisfy condition B as stated above. 

For a dissenting class, the court should not apply a rationality test based on the level of voting in assenting classes or the overall value of affirmative votes across the assenting and dissenting classes as a whole.  A ‘vertical’ comparison (comparing the position of the dissenting creditors under the Plan with the position of the dissenting creditors in the relevant alternative) has to be carried out in order to establish that condition A (the no worse off test) is satisfied, but this does not give rise to a presumption in favour of sanction.

The court should conduct some form of ‘horizontal’ comparison (comparing the position of the dissenting class with the position of the other classes if the restructuring goes ahead) and consider whether differences in treatment of creditors, inter se, are justified. The reference point for this analysis is the position of the creditors in the relevant alternative (for example, a formal insolvency). Where no justification is given, it will take a compelling reason to persuade the court to sanction the plan. Further, the court must inquire how the value to be preserved or generated by the restructuring plan over and above the relevant alternative is to be allocated between the different creditor groups. When considering whether the allocation of the assets is fair, the court should ask whether a different allocation would have been possible and fairer.

Pari passu Distribution

Where the relevant alternative is a formal insolvency, in which the claims of all plan creditors would rank equally for pari passu distribution, the court will normally approve a plan replicating that pari passu distribution in relation to the benefits of the restructuring. A departure from such pari passu distribution is permissible provided that it is justified by a good reason or a proper basis. It is likely to be justifiable that creditors who provide some additional benefit to assist the restructuring in the interests of creditors as a whole are entitled to receive some priority or enhanced share of the benefits. The analysis is likely to be highly fact sensitive but, for example, creditors who provide new money to facilitate the restructuring may be entitled to receive full repayment of the new money in priority to preexisting creditors or possibly some enhanced priority (elevation) in relation to their existing claims. There might be no justification for elevation of existing debt if, for example, (i) the opportunity to provide new money was not available on an equal and noncoercive basis to all creditors, (ii) if the new money was provided on more expensive terms than that available in the market, or (iii) if the extent to which the existing debt was elevated was disproportionate to the extra benefits provided by the new money.

The Court of Appeal decided that the provisions of the Plan under which the different series of Notes would be paid sequentially on their original maturity dates (or, in the case of the 2024 Notes, one year later) involved a departure from the pari passu principle because there was no assurance that sufficient sums would be realised by the Group to pay all of the noteholders in full. The Plan carried the risk that the earlier-dated Notes would be paid in full but the Group would run out of money before being able to pay the 2029 Notes. In short “the sequential payment to creditors from a potentially inadequate common fund of money was not the same thing as a rateable distribution of that fund.” There was no good reason for such sequential payments. Whilst, the enhanced priority given to the 2024 Notes involved a departure from the pari passu principle, this wasn’t the determining factor. The continuation of credit by the 2024 noteholders justified an elevation of their claims above other creditors.

Shareholder Rights

The Court of Appeal decided that the Plan was not unfair because the shareholders of the Parent Company retained their shares (albeit diluted by the new shares issued to the providers of the new money under the restructuring) even though the 2029 noteholders continued to bear the greatest risk of nonpayment.

In his judgment, Lord Justice Snowden indicated that there is no jurisdiction under Part 26A to confiscate or expropriate shareholder (or creditor) interests for no consideration. Some element of give and take is required and paying a “modest amount” of compensation should not unduly impede the restructuring process.

Cross-Border Considerations

Without expressing a view, Lord Justice Snowden indicated that this decision did not amount to an endorsement of Issuer Substitution in future cases.

Practical Considerations

The Court of Appeal emphasised that the court’s willingness to decide cases quickly to assist companies in genuine and urgent financial difficulties should not be taken for granted or be abused. In the case of a foreseeable deadline, sufficient time for a contested Part 26A process and full compliance with the relevant practice statement must be factored in.

Disclosure and cooperation

To prevent undue delay and expense, a plan company must make available the material underpinning valuations in a timely manner. If not, the court should exercise its power to order specific disclosure.  Parties and their advisers and experts must cooperate to narrow the issues which the court has to decide at the sanction hearing.

To prevent a restructuring plan from becoming effective prior to the outcome of any appeal, it is necessary for the appellant to apply for a stay. Alternatively, the appellant can apply for a direction that the order should not be delivered to the Registrar of Companies (at which point it becomes binding on the company and all affected creditors or members) pending an appeal.    

In response to the Court of Appeal’s decision, the Parent Company announced that it will continue its restructuring path as planned and that the implementation of the restructuring in April 2023 was carried out in accordance with German law and remains valid. In future and particularly in cross-border situations, appellants may demand undertakings not to deliver the order to Companies House pending any appeal.

The Adler decision has provided some welcome clarity for debtors, noteholders, and other stakeholders as to the principles applicable when formulating or responding to a Part 26A plan, particularly where CCCD is likely to be engaged. Parties pursuing a consent solicitation or other consensual mechanism but anticipating, in the alternative, the use of a Part 26A plan will want to have these principles in mind, ideally at the outset.

The practical application of the principles elucidated by the Court of Appeal will be a matter for future judgments. Uncertainties remain as to matters such as the effectiveness of Issuer Substitution and the level of compensation which “out of the money” creditors or shareholders should receive on the confiscation of their shares or extinction of their debts.

In the meantime, the complexity of the issues, such as the need to consider horizontal comparisons and whether there is a fairer or better plan, and the associated evidence suggests that UK restructuring plans will give rise to increasingly heavyweight litigation. Save in the case of unexpected urgency, parties must factor in sufficient time to comply with the Part 26A process and allow the court adequate time to consider the application and give judgment.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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  • Crown Castle-stock
  • News for Crown Castle Crown Castle

Crown Castle Founder Submits Restructuring Plan, Nominates 4 Directors

(RTTNews) - Real estate company Crown Castle Inc.'s (CCI) founder Ted Miller shared a letter on Tuesday, nominating four individuals to the board and detailing a plan to restructure the company's operations.

The founder proposed to sell off the company's fiber assets, repurchase $1.9 billion of shares, capture tax benefits estimated at more than $1 billion, optimize the operations, and increase shareholder value as the plan estimates EBITDA of $150 to $160 per share by 2026.

Miler emphasized increasing Crown Castle's AFFO after discretionary CapEx to over $5 per share from the current $3 per share by 2025, improving EBITDA margin to 75-80 percent from 70 percent, reducing total debt to around $17 billion, and paying down $4 billion of fixed-rate debt.

He also stated to increase AFFO after discretionary CapEx and dividend from a $1.3 billion deficit to a positive $200 million.

The founder also criticized the current board's management style and raised concerns regarding Crown Castle's agreement with Elliott Management.

Currently, Crown Castle's stock is sliding 0.39 percent, to $107.78 on the New York Stock Exchange.

Crown Castle News MORE

Related stocks.

business plan to restructure

Barclays focuses on Britain, cost cuts, buybacks to win over investors

  • Shares rise following 10 bln stg buyback plan
  • Lender eyes billions of cost cuts
  • Targets returns in excess of 12% in 2026
  • 2023 FY profit falls 6%, in line with forecasts

A woman walks past a branch of Barclays Bank, in London

NEW STRUCTURE

Reporting by Lawrence White and Iain Withers; Editing by Sinead Cruise and Alexander Smith

Our Standards: The Thomson Reuters Trust Principles. , opens new tab

Illustration shows Broadcom logo

Blackstone CEO Schwarzman received $896.7 mln in pay, dividends in 2023

Blackstone Inc Chief Executive Steve Schwarzman took home $896.7 million in pay and dividends last year, a 29% decline from his record take in 2022, according to a regulatory filing on Friday.

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IMAGES

  1. A Step By Step Guide to an Effective Company Restructure

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  2. Business Reorganization Plan Template

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  3. Business Reorganization Plan Template

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  4. Business Restructure Plan Template

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  5. Editable 5 Steps To Include In The Company Reorganization Process

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  6. Business Reorganization Plan Template

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COMMENTS

  1. 5 steps to include in the company reorganization process

    Include these 5 steps in the company reorganization process 1. Start with your business strategy

  2. Organizational Restructuring Process & Templates to Help Plan

    4 minutes • Nov 18, 2019 General At various points in a company's life cycle, an organizational restructuring will be necessary for growth, to accommodate a shift in company strategy, or to become more competitive. In the case of a merger or acquisition, for example, the company may restructure to focus on new lines of business.

  3. A Step By Step Guide to an Effective Company Restructure

    A Step By Step Guide to an Effective Company Restructure As a business grows, there will inevitably be challenges and ever-changing market conditions—many of which are unforeseen. To survive in a hyper-saturated, competitive market, companies have to be agile and willing to pivot in order to capitalize on opportunities or optimize inefficiencies.

  4. Strategy And Tactics To Lead A Restructuring In Uncertain Times

    In our experience, there are five actions that should be taken to ensure successful restructuring: engage advisors early, create transformational champions, set appropriate targets, have a clear and detailed plan, and recognize the importance of change management. Engage advisors early

  5. How to Develop a Successful Business Restructuring Plan

    December 10th, 2021 | Corporate Recovery & Insolvency Table of Contents What is a Business Restructure? Reasons for Business Restructuring How to Restructure a Business Take a Step Back Analyse Finances Formulate a New Structure Communication is Key Be Prepared to Adjust 3 Components of the Business Restructuring Process Strong Leadership

  6. Restructuring: Definition, Meaning, Process, and Example

    A company may restructure as a means of preparing for a sale, buyout, merger, change in overall goals, or transfer to a relative.

  7. Business Restructuring: What It Is and How It Works

    To restructure a business successfully, a debtor must make strategic, fundamental changes to the company and also have the resources to conduct major upheaval. Historically, most successful restructures are carried out by large businesses, while small businesses have gone from bankruptcy to liquidation.

  8. How to Conduct a Successful Business Restructure

    1. Avoid waiting too long A common mistake is waiting too long to restructure, even through the signs of trouble are there. Delaying restructuring not only reduces the options available to your business but it can also raise the risk of business failure.

  9. What Is Needed for a Business Restructuring Plan?

    The business restructuring process typically involves diagnosis, planning and implementation. The diagnosis phase is similar to a feasibility study and includes assessing a variety of possible...

  10. How To Make Restructuring Work for Your Company

    1. Design. What type of restructuring is appropriate for dealing with the specific challenge, problem, or opportunity that the company faces? 2. Execution. How should the restructuring process be managed and the many barriers to restructuring overcome so that as much value is created as possible? 3. Marketing.

  11. How to Plan an Effective Organization Restructure

    An organization restructure is a change in a company's business model, structure or processes. A restructuring can involve changes to the workforce, reorganization of company hierarchy or introducing new processes. The scale of a restructuring campaign can depend on factors such as launching a new product or meeting customer needs.

  12. How to Create a Winning Restructuring Proposal: Tips and ...

    1 Analyze the current situation Be the first to add your personal experience 2 Define the objectives and scope Be the first to add your personal experience 3 Design the restructuring plan Be...

  13. Organisational Restructuring Process

    A successful restructuring plan should include clear objectives to be met, timelines for key milestones, and strategies to ensure the process runs smoothly. Therefore, all the proposed restructuring should be in line with objectives of business strategy. ... Restructuring a business is not an easy task and involves a lot of factors. The steps ...

  14. Restructure or Reconfigure?

    Restructuring involves changing the structures around which resources and activities are grouped and coordinated—for example, function, business line, customer segment, technology platform,...

  15. Definitive Guide: What Is Restructuring in Business?

    Updated June 24, 2022 A company in business for a long time is likely to face times of restructuring to remain relevant and operationally efficient. Restructuring can result in a more lean operational process or resources allocated to exciting initiatives.

  16. Planning for Successful Restructuring

    The results of all analyses and restructuring measures must be shown in an integrated business plan, along with their impact on the balance sheet, income statement and cash flow. The plan must be resilient, i.e. stress-tested, and provide a firm benchmark for measuring the state of progress throughout the restructuring. Be practical.

  17. What is a Restructuring Plan?

    In situations such as compromising of debt burden, a Restructuring Plan enables a company to restructure its balance sheet and hence release working capital into the business. A Restructuring Plan may also provide a sustainable platform from which new monies (whether debt or equity) can be injected into the company to fund future operations and ...

  18. 6 steps to restructuring a business successfully

    These include: Downsizing or expansion; Relocation; Management changes; Ownership changes; Raising funding; Planning business closure or exit from the market. Organisational, asset or financial restructuring are effective ways to implement these changes which can increase the profitability and efficiency of a business.

  19. 7 Templates for Restructuring Your Team

    7 templates for restructuring your team Reading time: about 3 min For your business to grow, you have to be willing to make changes. Without embracing change, you might miss out on new technologies and better processes that can help you to keep up with or ahead of your competition. Sometimes a change might be as small as streamlining a procedure.

  20. 4 Types of Business Bankruptcy (and How to Restructure)

    Bankruptcy. Bankruptcy Lawyer. Business Bankruptcy. Chapter 11 Bankruptcy. Chapter 13 Bankruptcy. Chapter 7 Bankruptcy. There are four types of business bankruptcy. Learn about them and how to restructure under each type here.

  21. Business Reorganization Plan Template

    The business restructuring process typically involves diagnosis, planning and implementation. The diagnosis phase is similar to a feasibility study and includes assessing a variety of possible business scenarios. The planning stage requires the formulation of detailed operational and strategic plans.

  22. What to do when restructuring your business

    don't mislead or deceive one another. are active and constructive in establishing and maintaining a productive relationship. protecting your employees' privacy. your genuine business need to restructure. what you propose the new structure to be. Use this tool to find out which laws apply to you and your business — and save valuable time.

  23. How to plan a company restructure

    Communicate with employees. To most important element of a restructure is to communicate effectively with staff. This means informing them of the proposed changes and including them in feedback, factoring this into any final decisions. They should be given the opportunity to provide meaningful feedback with access to all the information ...

  24. UK Company Restructuring Plans: What Is Next After Adler?

    The England and Wales Court of Appeal recently handed down its first judgment relating to a restructuring plan under Part 26A of the UK Companies Act 2006: Re AGPS Bondco Plc [2024] EWCA Civ 24.

  25. Nemours to now oversee Crozer Health's pediatrics services

    Related: 'We are on our own': Struggling Crozer Health has plan to halt red ink Crozer Health laying off 215 workers in latest restructuring effort Related: Crozer Health laying off 215 workers in ...

  26. Cisco Plans to Cut Thousands of Jobs After Sales Growth Stalls

    Cisco Systems Inc., the largest maker of networking equipment, plans to cut thousands of jobs after a slowdown in corporate tech spending wiped out its sales growth. A restructuring plan will ...

  27. Crown Castle Founder Submits Restructuring Plan ...

    (RTTNews) - Real estate company Crown Castle Inc.'s (CCI) founder Ted Miller shared a letter on Tuesday, nominating four individuals to the board and detailing a plan to restructure the company's ...

  28. Barclays Leans Away From Wall Street in Overhaul Plan

    LONDON—Barclays, one of Europe's last major trans-Atlantic investment banks, is shifting its priorities from New York to London. Chief Executive C.S. Venkatakrishnan unveiled a broad plan ...

  29. Barclays focuses on Britain, cost cuts, buybacks to win over investors

    Barclays laid out a three-year plan to revive its flagging share price on Tuesday, including axing 2 billion pounds of costs, returning 10 billion pounds ($12.6 billion) to shareholders and ...