Corporate restructuring

Corporate restructuring involves companies with financial problems, but which nevertheless have the potential to survive, being restructured so that they can continue to operate.

Nowadays, corporate restructuring can be granted as soon as there is a risk that the company may end up in financial crisis. The idea is that the earlier a company can tackle financial problems and the more restructuring options are available, the greater the likelihood that the restructuring will be successful.

It is the company that applies for corporate restructuring and must also present a restructuring plan that specifies the measures it considers necessary for the restructuring to succeed. Examples of such measures include reducing the company's debts, renegotiating long-term agreements, selling business units, obtaining new financing, changing the ownership structure, issuing shares, etc.

The company's debts are reduced through a composition agreement, which means that creditors receive part of their debt and the rest is written off. A composition agreement therefore requires liquidity in order to be implemented.

In order fora company to be granted corporate restructuring, it must be able to demonstrate that the purpose of the restructuring can be achieved. The idea is that companies where the likelihood of successful restructuring is lower should not be allowed to initiate corporate restructuring. For restructuring to be successful, the company must have a fundamentally strong economy and a profitable core business.

The board and CEO continue to run the business even during a reconstruction, although their ability to make decisions is limited. At the same time, a corporate reconstructor is appointed to look after the interests of the creditors. There are many regulations governing the reconstruction itself, and it takes time to complete, partly because some decisions must be confirmed by a court in order to be valid.