The term “restructuring” is utilized to describe any process that brings about substantial alterations to a company’s debt, operations, legality, or structure. In instances wherein a firm is on the precipice of insolvency or encounters a substantial predicament, the implementation of corporate restructuring measures is undertaken with the objective of effectuating a turnaround.
It typically involves the reconfiguration of legal, ownership, operational, fiscal, and other business frameworks in order to enhance the profitability, organization, or adaptability of the firm, or to align with evolving market conditions and demands.
Why to Reconstruct:
In the majority of instances, it is customary for official legal procedures to commence the process of restructuring; however, it is within the purview of administrators to explicitly initiate said process within the confines of the company in order to restore its financial viability.
If you are inquiring as to whether the act of restructuring is solely a matter of legal significance in the event of a company’s insolvency or bankruptcy, the response is negative. Numerous enterprises experiencing financial difficulties are compelled to undertake reorganization measures in order to circumvent insolvency of corporate restructure.
In the event that a firm finds itself submerged in a substantial amount of debt, it would be prudent to seek the guidance of a turnaround and restructuring consultant. Additionally, it would be advisable to engage the services of a legal professional to engage in a discussion regarding the potential remedies that may be accessible to the firm. Such a course of action has the potential to yield advantageous outcomes.
Laws Governing Restructure:
In the jurisdiction of Bangladesh, it is to be noted that there is a dearth of duly enacted statutes or regulations pertaining to the process of corporate restructure. Notwithstanding, it is pertinent to note that there exist additional statutes that govern the process of corporate reconstruction.
The aforementioned statutes encompass the Companies Act 1994, the Bankruptcy Act 1997, the Bankruptcy Rule 1997, and the Money Loan Court Act 2003. All matters pertaining to the reorganization of legal, ownership, operational, fiscal, and other corporate structures, as well as the cessation of business operations and the distribution of assets, are encompassed within the provisions of the Companies Act of 1994.
Once more, in the event that a company becomes insolvent, it is imperative to note that the abrogation of adjudication, composition and scheme of the arrangement, re-organisation, discharge and undischarged status of the bankruptcy, as well as the ultimate recognition of the property, are all duly stipulated within the provisions of the Bankruptcy Act 1997 and the Bankruptcy Rule 1997.
Pursuant to customary practice, individuals commonly entrust their funds to financial institutions, known as Banks, with the intention of facilitating prudent investment and seamless financial transactions. However, it is important to note that on certain occasions, a predicament may arise wherein certain borrowers default on their obligation to repay the borrowed funds, thereby placing the Banks in a precarious position. Henceforth, it is duly noted that the esteemed Government has duly promulgated a specific legislation, namely the Money Loan Court Act, 2003 (commonly referred to as Artha Rin Adalat Ain 2003), with the express purpose of ensuring the precise and expeditious recovery of funds from delinquent borrowers.
The aforementioned courts are currently functioning in a parallel manner. According to the provisions of the Artha Rin Adalat Ain, it is established that the mortgaged property of the debtor shall be subject to liability. Simultaneously, it is imperative to acknowledge that the bankruptcy law imposes upon the debtor a legal constraint, wherein the debtor becomes subject to liability encompassing the entirety of their property.
The Bankruptcy Act of 1997 exclusively pertains to the matter of individual bankruptcy. Notwithstanding, it is imperative to acknowledge that international bankruptcy law has recently undergone a significant transformation, wherein the emergence of notions such as cross-border insolvency and the establishment of the UNCITRAL Model Law on cross-border insolvency in 1997 have played a pivotal role. In accordance with the status of being a member state of the United Nations, it is incumbent upon Bangladesh to adhere to the provisions set forth in the model law.
What Corporate Restructure Lawyers Do?
Corporate restructuring is a legal mechanism that empowers businesses to strategically modify their business practices that may be adversely impacting their financial performance. This process also allows businesses to restructure their debts and enhance their organizational structures and processes in order to restore their overall viability. In the event that a favorable reorganization is successfully executed, it may lead to a substantial settlement.
Conversely, a failure to undertake the necessary restructuring measures has the potential to render a firm insolvent and ultimately result in its cessation of operations. It is of utmost importance that an individual retains the services of a highly experienced restructuring attorney in order to procure guidance, support, and oversight throughout the course of strategizing, coordinating, and administering said procedure.
Legal professionals who possess expertise in the field of debt restructuring engage in the provision of legal services to either debtors or creditors. The nature of their work shall be deemed non-controversial, primarily involving the negotiation of transactions and the establishment of repayment arrangements, thereby enabling the creditor to resolve the outstanding amount in question without succumbing to insolvency of Restructure .
Bankruptcy attorneys, acting on behalf of both debtors and creditors, undertake a multifaceted role that encompasses various stages of the insolvency process. Their involvement spans from engaging in negotiations pertaining to voluntary arrangements for businesses, to overseeing administration and receivership proceedings. It is important to note that the nature of their work can be subject to controversy. Additionally, it should be noted that they are an integral component of the liquidation procedure. The nature of the work shall be predominantly ascertained by the type of corporation and the clientele it represents.
In the esteemed establishment of Russell and Partners, we provide legal guidance to a diverse array of individuals and entities confronted with fiscal difficulties. Our expertise encompasses an extensive spectrum of transactions, encompassing but not limited to restructuring and rescue securitizations of Restructure , work-outs, debt rescheduling, debt to equity swaps, corporate finance transactions, structured receiverships, corporate restructurings with or without insolvency processes, and the exchange of bankruptcy claims.