Restructuring for business efficiency
Many business owners are looking to increase their business’ efficiency in order to adapt to necessary changes such as remote working and get back to their pre-COVID 19 financial position. Restructuring your business could help to increase its efficiency by enabling you to shut down un-profitable areas of your business and focus on enhancing profits in other areas.
There are various parts of a business that can be moved around in order to improve efficiency.
Divisions
If your company operates different divisions with different management teams, a restructure may involve separating these divisions into different subsidiary companies. A benefit to doing this is that the liabilities of each division will be ring-fenced within the individual subsidiary company. This will make it easier to shut down an unprofitable division whilst minimising impact on the rest of the business.
Assets
Assets can be moved around within a corporate group or sold off if they are no longer required. A company could transfer assets to a different company within its corporate group or sell assets to a third party.
If you are shutting down an unprofitable part of your business, does it have assets such as offices which can be sold or utilised by another arm of the business? There may also be assets not currently required by the business if employees are working remotely.
People
In order to focus the business on more profitable areas, you may have to consider moving employees around. This could involve transferring employees to different divisions or roles which are busier during the current climate.
Operations
Reviewing your corporate structure can highlight parts of your business that may be overspending and not making profit. You may be able to cut costs by streamlining processes and administrative functions. Consider if there are operations that can be outsourced. If your business has separate divisions, are there services being duplicated that can be shared between the divisions?
Financing
Debt restructuring is a common way of getting more money into a business. You may be able to seek additional finance from your existing lenders or be able to take advantage of one of the government’s schemes to support businesses with ongoing cashflow requirements. View our insight on the Coronavirus Business Interruption Scheme (CBILS) here and our insight on the Corporate Financing Facility (CCFF) here
If you have a number of outstanding creditors, you may also be able to restructure your debt and continue trading by introducing a Company Voluntary Arrangement (CVA). A CVA is a legally binding agreement between you and your creditors where you can agree to pay a proportion of the debts or postpone payment of the debts.
How can we help?
Our team of specialist corporate lawyers are able to assist you throughout your reorganisation, from advising on the most appropriate structure to supporting you in implementing any changes. Getting the right advice will ensure that you achieve the most efficient business structure, which in turn can support the business’ financial growth.
For strategic legal advice on this matter, contact our expert corporate lawyers as soon as possible. Please contact Yavan Brar on 01189 899713, Matthew Lea on 01189 898155 or Chris Gemson on 01276 854669.
This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.
Latest Articles & Legal Insights
EIS – Considerations for an Investor
The Enterprise Investment Scheme (EIS) is a government program that helps fund early-stage companies and provides tax benefits to investors.
Key Considerations When Selling a UK Financial Services Business
The sale of a financial services business needs to adopt an appropriate structure with expert legal and tax advice.
Missing Shareholder – what do we do?
Have the gears of your company ground to a halt as a result of a missing shareholder throwing a spanner in the works?
Commercial contracts in 2024 and beyond Q&A
Q&A on commercial contracts in 2022 and beyond: businesses are looking further than their ESG initiatives to achieve net zero.
CAP and BCAP update: new rules on alcohol alternatives
New rules have been developed to ensure responsible advertising of alcohol alternatives and to protect consumers from potential harm.
Threshold updates for High Net Worth and Sophisticated Investors
New thresholds for categorising investors as high net worth or sophisticated will come into force on 31 January 2024.
Sign up
Enter your email address for legal updates on Corporate and Commercial law.
Top read insights in 2019
Contract Law
Material Breach of Contract
What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?
Property Law
Purchasing Land – Option Agreements
A developer and a landowner can enter into an Option Agreement. What are the strategies that can be employed by both landowners and developers to assist in such land deals?
Divorce and Family Law
What are the Tax Implications of a Civil Partnership?
Is there a significant tax saving to be made by a couple who are married or in a civil partnership that cohabitating couples simply don’t qualify for?
Land & Property Dispute
Restrictive Covenants – The Price of Modification
Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?
Award winning legal advice
Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2024’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023 & 2024’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.
London
60 St Martins Lane, Covent Garden, London, WC2N 4JS
Camberley
Building 2 Watchmoor Park, Riverside Way, Camberley, Surrey. GU15 3YL
Wokingham
Opening Soon
info@herrington-carmichael.com
© 2020 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.
Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority.
Privacy | Terms and Conditions | Cookies | Client Feedback