The current economic conditions across the world in the context of the coronavirus pandemic have influenced restructuring and rescheduling in the business sector. Many companies are following these methods to enhance their efficiencies or to streamline business processes; however, many others are forced to do this out of some financial challenges. If you are also planning to restructure your business post-pandemic, it is first important to understand the restructuring landscape and associated legal issues carefully. Specific rules and regulations may apply depending upon the location of your business. The best idea is to receive adequate legal advice from experts as they can break down the complex restructuring procedures into easy terms for you. However, here we are going to discuss a few essential elements that demand your attention before taking corporate restructuring consulting and financial restructuring services in 2022.
Corporate Restructuring Consulting – Company Law Framework
The restructuring process usually involves corporate reorganization as the most important aspect under company law. This dictates the reorganization structure while presenting clear information on how it will be affected by amalgamation or merger. The main aspects in this process involve a reduction in capital, dividend in specie, transfer of liabilities and assets, insolvent or solvent liquidation, or striking off. The restructuring process involves a combination of all these; therefore, it is better to receive legal advice on how you can handle them more efficiently.
Duties of Directors
The duties of directors usually vary from jurisdiction to jurisdiction; therefore, directors need to stay updated with the latest guidelines. The directors may be required to consider the interest of involved shareholders; however, in the case of solvency, the interest of creditors is given equal importance. Boards need to receive early advice if there is a question of solvency so that they can protect themselves from any personal liability. At the same time, insolvency laws and board fiduciary duties may pose some liabilities and obligations in a few conditions.
Corporate restructuring consulting in the internal group usually involves intra-group transactions. In such situations, it is important to consider the value at which a specific transaction occurs along with fair value, book value, consideration received, and relevant legal consequences. This is essential in the case of a solvent situation where an organization needs to distribute profits as well as in the case of insolvency where a transaction may be otherwise considered as an unfair preference. The approval from shareholders may be also required to process documents. Other than this, it is important to pay attention to the capital relocation and creation of new capital as required. The involved parties may also need to receive regulatory approvals while considering the tax liabilities of the concerned jurisdiction. The relevant decisions about external financing, if any, must be also taken very carefully. In order to handle all these requirements, it is good to hire an experienced and trusted team of financial restructuring services providers. They may help you proceed ahead safely to complete the company restructuring procedure.