Corporate Restructuring

Continuous organizational learning is necessary to stay up to date. Organizations that cannot or will not learn will become obsolete. Leaders must periodically examine the structure of their organization to assure that it continues to provide an environment for organizational learning. The points of leverage in organizations are the beliefs and worldview of their decision makers. The sense of purpose, vision and commitment of an organization’s leadership play a critical role in the results it can accomplish.

Restructuring is the process through which an organization radically changes the contractual relationships that exist among its creditors, shareholders, employees, and other stakeholders. It is the corporate management term for the act of reorganizing the legal, ownership, operational, financial or other structures of an organization for the purpose of making it more profitable and efficient. Strategies of restructuring include portfolio restructuring, organizational restructuring and financial restructuring.

Restructuring is an on-going process. It is a valuable tool for an organization to use in an attempt to maintain their goals and objectives. The choice of which strategy to use will depend on the area the organization wishes to improve, i.e. profitability, performance, or operation.

The basic nature of restructuring is a zero-sum “game”. It reduces financial losses, while reducing tensions between debt and equity holders to facilitate a prompt resolution of a distressed situation or a situation that requires change.


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