The corporate restructuring Singapore may also happen as a reaction to certain problems that business is experiencing in the hard-to-compete market.
Corporate restructuring defines the plan to change the structure, management, or operations of a corporation. The restructuring can be either involuntary or voluntary. In the case of voluntary restructuring, the companies take initiation themselves to handle financial distress. However, in the case of involuntary restructuring, the orders are given by the court by following bankruptcy laws.
Corporate restructuring, in general, differs from mergers & acquisitions because it doesn’t involve the sale of one company to other. Moreover, it may also differ from divestitures that involve selling various parts of the organization.
Organizations may initiate corporate restructuring if they feel that they need to change the capital structure or may need to update a few other operations by a considerable level to become more competitive in the market.
Popular terms in Corporate Restructuring Singapore you should be familiar with
There are two main reasons to lead corporate restructuring: corporate growth and financial distress. For beginners, there are so many essential terms to understand before proceeding ahead with the restructuring process:
It is the process of placing the company under the control of some licensed insolvency practitioners in Singapore. Sometimes they may also require protection from the court to handle company insolvency. The main aim of administration is to ensure company rescue so that they can achieve improved outcomes.
Bankrupt is the term used to define an insolvent person who has received a bankruptcy order from the court and has not been discharged yet.
- Director Duties
It is important to have a relationship of confidence and trust between directors, shareholders, and company members. The fiduciary duties followed by the directors are as per the Company’s Act defined in the year 2006 for corporate restructuring Singapore.
Usually, a moratorium must be kept in place to protect a business, person, or company for a specific duration of time. During this pre-defined tenure, few specific activities may be required and others are blocked.
- Member’s Voluntary Liquidation
When the shareholders of some solvent company are able to pay off all the pending debts that are due or payable, it is defined as voluntary liquidation. In this scenario, a corporate restructuring advice may be required to proceed ahead easily. The process also gives more assurance that pending liabilities will be dealt with carefully.
There are generally two main types of receiverships: court-appointed and private. The general security agreement holder or mortgage company may be given the power to appoint a receiver. They continue to operate a business to realize maximum value. They act like an agent for the company and can make the best out of an available number of assets.
- Scheme of Arrangement
This terminology is commonly used by complex and large company reconstructions due to the time and cost involved in the process. In this process, the creditors of the company may be divided into different classes and all classes in this category are treated differently. With corporate restructuring advice from experts, you can avail finest outcomes with this type of arrangement.