{"id":4650,"date":"2022-05-05T09:22:11","date_gmt":"2022-05-05T14:22:11","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/closing-a-business\/how-to-restructure-or-reorganize-a-company.html"},"modified":"2024-05-23T00:54:02","modified_gmt":"2024-05-23T05:54:02","slug":"how-to-restructure-or-reorganize-a-company","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/closing-a-business\/how-to-restructure-or-reorganize-a-company.html","title":{"rendered":"How To Restructure or Reorganize a Company"},"content":{"rendered":"\n
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How To Restructure or Reorganize a Company<\/h1>\n
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\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

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Companies reorganize if they have financial troubles, have new owners, or are undergoing structural changes. Small businesses may restructure to prepare for a sale, buyout, or merger.<\/p>\r\n

Business restructuring doesn’t always work. A successful restructuring can lead to higher profits, greater efficiency, and debt paydown. An unsuccessful attempt can lead to insolvency or bankruptcy.<\/p>\r\n

Large or small, businesses need a restructuring or reorganization plan before beginning the restructuring process. The most drastic reorganization is a Chapter 11 bankruptcy. This method is useful for businesses facing liquidation since it allows them to pay off creditors while restructuring the company.<\/p>\r\n

Small business owners may consider other types of reorganization before they reach the bankruptcy and liquidation stage. This article reviews some of the options.<\/p>\r\n

What Is Restructuring?<\/b><\/h2>\r\n

Restructuring<\/b><\/a> is when a company overhauls its strategy, setup, and operations. A company may also reorganize business units, staff, products, or services.<\/p>\r\n

There are a few reasons why a company may need to restructure, such as changing its organizational structure or business model. Financial benefits like profit growth can also inspire a company to reorganize.<\/p>\r\n

There are two main types of restructuring: financial and organizational.<\/p>\r\n

Financial<\/b><\/h3>\r\n

Financial restructuring is any substantial change in a company’s economic structure, ownership or control, or business portfolio. These kinds of restructuring plans aim to increase the company’s value.<\/p>\r\n

Going through the process of financial restructuring isn’t just an option for struggling companies. Stable companies can also benefit from it. A financially stable company can opt to restructure as a preventive measure or to save money.<\/p>\r\n

There are two components of financial restructuring:<\/p>\r\n