Boca Raton Bankruptcy Lawyer

What is Restructuring?

With today’s headlines dominated by news of big-business bankruptcy, buyouts, and other financial woes, a lot of terminology has been flying around that those unfamiliar with the corporate world might not immediately grasp.

Reports seem to surface daily on the ongoing “restructuring efforts” of troubled industrial giants like General Motors or government agencies such as Freddie Mac and Fannie Mae. But what exactly is restructuring? Why is it so important, and what place does it have in the context of bankruptcy?

Restructuring Basics

On the most fundamental level, restructuring is the process of reorganizing major aspects of a business, usually as a response to a possible or existing crisis. This overhaul typically involves the legal and operational components of a company, and more often than not brings into question its management – firing and replacing all or some of those occupying top-level positions is not an uncommon part of restructuring.

Some individuals actually make a living by serving as temporary CEOs employed by troubled companies to turn things around. Once things seem to be on track, these emergency responders may part ways with the business again.

Why Restructure?

Companies often decide to restructure when debts become unmanageable. Those in charge of the restructuring will generally use a company’s assets and liabilities as tools of negotiation. In other words, the things a company owns and owes become bargaining chips when discussing “bailouts” (loans given to struggling business to keep them on their feet) with government and private financing institutions.

Oftentimes, restructuring is simply the only thing left to do when a company has become too mired in debt and bogged down in inefficiency to make piecemeal adjustments. This is why the term has become so commonplace in recent months.

Contact Us

For information on the relationship between successful restructuring and bankruptcy, contact the experienced Boca Raton bankruptcy lawyers of the Law Offices of Eric N. Klein, P.A. today by calling 561-353-2800.