Business Restructuring & Insolvency
Business is risky. A host of reasons may cause companies to struggle and, in some cases, force a business restructuring or trigger an insolvency proceeding.
- Restructuring is a type of corporate action taken when significantly modifying the debt, operations or structure of a company as a means of potentially eliminating financial harm and improving the business. When a company is having trouble making 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 bond holders. A company restructures its operations or structure by cutting costs, such as payroll, or reducing its size through the sale of assets.
- Insolvency is the state of being unable to pay the money owed, by a person or company, on time; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.
- Cash-flow insolvency is when a person or company has enough assets to pay what is owed, but does not have the appropriate form of payment. For example, a person may own a large house and a valuable car, but not have enough liquid assets to pay a debt when it falls due. Cash-flow insolvency can usually be resolved by negotiation. For example, the bill collector may wait until the car is sold and the debtor agrees to pay a penalty.
- Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts. The person or company might enter bankruptcy, but not necessarily. Once a loss is accepted by all parties, negotiation is often able to resolve the situation without bankruptcy. SAPL will help and advice business owners with financial problems as we understand how stressful it can be when your business experiences difficulty. Some of the situations are simple to resolve, others are more complicated, involving multiple international jurisdictions.Financial and operational problems require specialist skills and our extensive experience, and understanding of complex issues helps us plan the most sensible way forward for you and your business.SAPL team work closely with other professions such as bankers, venture capital funds and lawyers to restructure and refinance struggling organizations, across numerous industry sectors on projects that are both national and international.
Our first priority is to focus on recovery – both of the business and its corporate structure. Many businesses can avoid administration or liquidation by seeking professional advice as early as possible.
Therefore, contact us for further discussion.
Business re-structuring will bring a range of benefits to your company and people, such as:
- A clear focus and sense of direction
- Reduced operating costs
- Increased available internal cash
- Improved, centralised cash management
- Improved returns from re-prioritised investments
- Improved control
- Restructured debts with the improved financial terms
- Improved management information to improve decision-making
- Better growth
- Better organisation of your people, increased leadership and staff motivation – better talent retention and productivity.