In recent years, many large companies have overseen reorganisation plans. A restructuring is a formal arrangement between your company and your creditors and/or stakeholders, often agreed upon in challenging financial situations.
The majority of companies facing financial difficulties are eligible for a reorganisation. A proposal will be written before a court application, and then creditors will vote on the proposal.
Whether you’re about to sell your business or you’re planning changes, reorganisation can be a tricky matter. Here are some legal strategies to help make things easier.
Be Aware of Potential Liabilities
Any business reorganisation may come with legal liabilities, including those related to employee rights, existing contractual obligations, and outstanding debt.
You should also ensure that your new structure continues to comply with data protection and privacy laws. Any changes made need to follow the General Data Protection Regulation (GDPR) and the Data Protection Act.
Existing Contracts
It’s also important to consider any existing contracts with customers, and whether these agreements addressed a change of control. You may have customers that need to be made aware of a change in leadership, or even have agreed clauses that may be triggered by the restructure.
Another thing to be mindful of is whether any of your software licenses need to be paid at the time of a reorganisation.
Larger companies with a greater pool of clients will of course need more time to examine their existing contracts, which brings us to the next tip.
Engage Early
A business reorganisation takes time to plan – and that’s before you’ve reached negotiation, documentation and implementation.
The planning stage will involve analysing the current state of your business, reviewing job roles, and then considering how you would like your business to look in the future.
Customers and suppliers may have their own timetable in mind for dealing with concerns. By engaging early with them, you’ll be able to minimise the stress that may come with a reorganisation.
You’ll need to identify your top customers and those that require notice of any changes, and communicate clearly so that their trust is retained.
Seek Expertise
The potential concerns discussed above may necessitate seeking outside help. As with any other task in business, a reorganisation is more easily achieved with experts.
Professionals such as business consultants and corporate solicitors can help advise on how to best restructure your business. Experts will understand your reasons for wanting to restructure, and advise appropriately.
Communicate with Your Employees
The most successful companies are those with effective communication and collaboration. Salesforce has reported that 86% executives viewed ineffective collaboration and communication as a major cause of failure in business.
During a restructure, employees and stakeholders need to know about the potential impact on them. Clear communication ensures greater trust and everyone remaining on a shared path.
In some countries, such as The Netherlands and France, works councils and trade union representative bodies need to be notified about a restructuring. Even if this doesn’t apply in your case, employees will appreciate clear communication and also having the chance to voice their concerns.