Corporate restructuring generally refers to the dismantling and reorganisation of a company or group of companies, by way of a movement of assets between companies within a group, the splitting of a single company into a new group structure, or the amalgamation of an existing group into a smaller number of companies.
The nature of a corporate restructuring can range from a straightforward transfer of a small number of assets between group companies, through a wholesale change in the way a company or group's business operates, to a complete division of the business into two or more independent entities.
The most common reasons for a corporate restructuring are:
- To prepare the company or group for the addition of a new business (whether by expansion or acquisition)
- To rearrange a business structure to better accommodate a recently added business
- To prepare the company/group or some part of it for sale
- To improve the management or financial structures of the group/company and increase operating efficiency
- To spread risk
- To aid in a recovery plan for a group/company that has experienced financial difficulties
- To move assets or businesses to a jurisdiction outside the UK (typically for tax planning pruposes)
Although a restructuring is generally an internal procedure within a group or company, it is always advisable for the restructuring to be carried out on a formal basis, with the correct documentation in place. Even though the companies involved are by their very nature intimately related, it is important that the restructuring stands up to outside scrutiny. A future sale of any part of the restructured organisation might be prejudiced if there is no proper paper trail demonstrating the movement of assets within the organisation. In addition, if a group company later becomes insolvent, if the restructuring has not been carried out properly then assets transferred way from that group company to another part of the group might be at risk.
We have extensive experience and expertise in advising on corporate restructuring and drafting all the necessary agreements used in the different types of restructuring. We take a realistic and commercial approach to a client's needs, always ensuring that we understand the commercial imperative behind the restructuring, in order to tailor the advice and documents to best fit the client's requirements.