Orr Litchfield

Solicitors and Business Lawyers

Reorganisations and restructuring

What is a reorganisation or restructuring?

When business owners start a new business, they are usually able to decide which business structure is most appropriate for them and their business. As the business develops and grows, the existing business structure may cease to be the most appropriate structure for the business for a variety of reasons.

It is important for business owners, directors and management to review the existing business structure at appropriate intervals or when they become aware of any issues which may affect the existing business structure or potential alternative business structures positively or negatively (for example, changes in the law, tax or accounting).

In general terms, the reorganisation or restructuring of a business or company (or group of businesses or companies) simply involves the process of changing the existing business structure to a new business structure. Normally a reorganisation or restructuring will involve the transfer of shares in companies (for example, the shares in subsidiaries), the transfer of businesses or parts of businesses and/or the transfer of specific business assets. However, it may simply involve changes in the capital structure in one way or another. The level of complexity of such changes can vary enormously. However, it is vital that any reorganisation or restructuring of a business or company (or group of businesses or companies) is carried out properly and in accordance with the relevant law and regulations.

Why carry out a reorganisation or restructuring?

There are several reasons why a business or company (or group of businesses or companies) may wish to carry out a reorganisation or restructuring. These include the following reasons, some of which overlap:

(a) Tax efficiency and planning,

(b) Financial and economic efficiency,

(c) Administrative efficiency,

(d) Operational efficiency,

(e) Legal risk management or mitigation,

(f) Protecting key business assets,

(g) Returning cash or assets to investors,

(h) Succession planning, and

(i) Financial distress.

When should a business or company carry out a reorganisation or restructuring?

Whilst it is important for business owners, directors and management to review the existing business structure at appropriate intervals or when they become aware of any issues which may affect the existing business structure, it is common for a reorganisation or restructuring to be carried out in connection with the following events:

(a) When seeking to attract or obtain investment or finance,

(b) By a seller as a provisional step prior to the sale of the whole or part of a business or company (or group of businesses or companies),

(c) By a buyer as a provisional step prior to the acquisition of the whole or part of a business or company (or group of businesses or companies),

(d) By a buyer after the acquisition of the whole or part of a business or company (or group of businesses or companies),

(e) When implementing management or staff incentive schemes, and

(f) When the whole or part of a business or company (or group of businesses or companies) is under financial distress.

How can Orr Litchfield Solicitors help you with your reorganisation or restructuring?

Orr Litchfield’s corporate lawyers are able to assist business owners, directors and management with a range of different types of reorganisation or restructuring and related issues including:

Business and asset transfers, Capital reductions, Changes in share classes and rights, Converting private companies to public companies, Converting sole traders and partnerships to a limited companies, Demergers, Group reorganisations, Hiving-up or hiving-down assets, Joint ventures, Management Buy-Ins, Management Buy-Outs, Mergers, Purchases of own shares, Refinancing, Restructuring share capital, Schemes of arrangement, Share acquisitions, Share buybacks, Share exchanges, Share reorganisations, Share rights issues, and Strike offs.

Contact us

If you would like more information about reorganisations or restructuring or would like to discuss a potential or existing a reorganisation or restructuring, please email us at enquiries@orrlitchfield.com, complete an Enquiry Form or call us.