Business Restructuring

What is a Business Restructure?

Business restructuring can mean different things depending on the circumstances of the company, but when a company is facing financial difficulty, it usually refers to reorganising the business so it can continue trading in a stronger and more sustainable way. In many cases, this involves setting up a new company with the same directors and shareholders and continuing the trade through that new entity.

This approach is typically considered when the underlying business is still viable, but the existing company is no longer able to deal with its debts or liabilities. The old company is then closed through the appropriate process, allowing the business itself to move forward without the burden of historic debt. The aim is to protect the future of the business, preserve jobs, and allow trading to continue with a fresh start.

How Do I Know if I Should Restructure?

Firstly you would need to understand if it's the correct option and ask questions like:

1. "Why has the company failed?"
2. "Is the business still viable?"
3. "What implications and hurdles would need to be overcome before taking this route and committing to the business again?"

If you’d like a clearer picture when answering these questions, our Business Health Check can help you assess your company’s current position and highlight any potential risks or opportunities before you make a decision.

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How to Restructure a Business

Restructuring can be done by 2 ways:

1. Pre Pack
This is when a sale is agreed with the proposed Administrator and Directors of the new company to purchase the business and all assets and goodwill. Once agreed, the company enters into Insolvency and immediately afterwards, the new company is trading the business. This is a seamless transition.

2. Alternatively...
The company could cease to trade and then a new company purchases some of the assets through the liquidator once appointed.

This is more common for owner managed businesses, where there is one director and little value in the company, as the main asset is the actual Director/Business Owner.

Before committing to either route, our Business Health Check gives you a confidential assessment of which option might suit your circumstances best.

Seek Advice First

You need to go through the correct process and time is usually a factor, which is why it's best to understand as early as you can your options and how things affect you - especially when you wish to use the current (insolvent) company's trading name, or a similar sounding name. If things are not done correctly, you could breach rules like Section 216 of the Insolvency Act which have huge personal implications.

Our Business Health Check can help you identify risks early and clarify your position before taking action. Or request a call today and speak to one of our advisors to explore your options if this is the path you're considering.