Business Restructuring During The Coronavirus COVID19
Business restructuring during the Coronavirus COVID19 pandemic involves restructuring of a company’s assets and liabilities. The procedure includes suspending or ceasing a business line, closing stores or factories, and creating general team member cutbacks. Decisions either for performance, cost or location. The procedure involves a charge against earnings for that trading period. Compare debt restructuring.
While considering restructuring a company, apart from the above, the company may wish to accomplish more efficient and adapt to ever-changing markets, new markets, and times with the Coronavirus COVID 19 pandemic. Significant corporate restructuring activities include tender offers, mergers, acquisitions, spin-offs, leveraged buyouts, divestitures, equity carve-outs, liquidations and reorganisations.
What is Restructuring
Companies restructure ready to sell, merger, change business direction or be absorbed into the existing group. Therefore, it may restructure after the failure of a new product, consuming cash and building debt, and reducing operating costs accordingly.
However, subject to the approval of shareholders and possibly creditors, the board may decide to sell company assets, raise cash, reduce debt, and consider a pre-pack administration.
Business Restructuring during the Coronavirus Covid19 – The Process?
When a company is restructured internally, operations, processes, departments or ownership can change, making it more integrated and profitable.
Advisors typically join short term, to implement the restructuring plans. Divisions however may be sold to other investors, and a new management team starting from the top is put in place.
Results include alterations in new efficient procedures. The company invests in updated computer systems and the latest software, faster, bigger networks, possible relocation, or company sites’ closure.
During the restructuring, legal teams remain close to assist with issues.
Restructuring therefore then enters an unsettled period for the company, often an awkward time as the company’s dynamics change. Change may result in loss of workforce, though upon completion, the company will operate far better. Once employees adapt, the restructured company should perform better through less debt, further improving performance, especially efficiency in production methods.
HMRC Support During the present pandemic.
Within the United Kingdom, HMRC are offering support to help companies through this unprecedented time.
Please read further on our web page ‘HMRC support for contractors during pandemic
For further detailed help, please view ‘Business Restructuring and HBG Advisory‘.