Restructuring

At PSB, we have a wealth of experience in advising different types of businesses and use this to discuss restructuring ideas with a company’s directors as a first option. In many cases, financial difficulties do not mean the end of a business. Now, more than ever, we are seeing the need for businesses to ‘pivot’ and diversify what they do to adapt to the changing landscape.

Restructuring a business at the right time can enable it to continue, often successfully, for many years.

For some businesses, examples of basic restructuring can include:

  • informal negotiations with creditors,
  • working through cashflow forecasts to enable better cost management,
  • adjusting business processes to ensure simplification or streamlining,
  • changing product lines or sales outlets,
  • refinancing existing debts,
  • obtaining additional financing, in specific circumstances

In some cases, it is not possible to informally restructure a business to adequately improve its financial position. At this stage, a more formal insolvency process may be required. This could be in the form of:

Company Voluntary Arrangement (“CVA”)

A CVA is an agreement between a company and its creditors. This allows a company to pay its creditors an agreed sum of money, often over time, in full and final settlement of its debts.

A CVA requires a proposal to be made and agreed with the creditors. The arrangement must be formally monitored by an Insolvency Practitioner. 

Administration

When a company enters Administration, it provides legal protection (‘breathing space’). An Insolvency Practitioner takes over the running of the company to try to improve trading and ensure the best result for creditors.

Administration is simply a process which bridges a company from its current unsustainable state to the next phase of its life. This can be either a sale of the business, another insolvency process (for example, a CVA) or a formal liquidation of the company, if it is no longer viable.  

Pre-pack Administration

A Pre-Pack Administration is a sale of a business at the start of an Administration process. This is generally arranged beforehand, with the sale of the business taking place on or shortly after the appointment of the Administrator.

In the right circumstances this can produce the best results for the stakeholders, creditors and shareholders. However, it is important to ensure that these transactions take place in a transparent manner. There are strict rules and regulations that must be adhered to.

For further options, please also see our Corporate Insolvency services 

Get in touch to find out how we can help you with Restructuring.

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