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Would it help your business get back on its feet if debts could be paused, or reduced, until the business can afford to pay them? Or, do you need to exit from some loss-making location leases?
If your business had to pay all of its debts when the payment schedules or invoices say they should be paid, would that be stressful?
If you answered “Yes” to any of the above questions, read on because a Restructure may be your answer.
A ‘Restructure’ is a set of actions taken by a company (or group of companies) to significantly change its debt, operations and/or structure, usually when there is financial pressure, with the aim of limiting financial harm and improving the business.
There are two main types of Restructuring – Informal Restructuring and Formal Restructuring. Businesses can do one or the other, or a combination of both.
Different types of restructuring are used to address different issues in a business.
In summary, an Informal Restructure usually involves talking with the business’s key creditors, financiers, management and investors and cutting deals, renegotiating agreements, and making improvements to make the business profitable again, or more profitable into the future. These discussions usually start with the frank admission that things cannot remain as they are, and change is needed in order for the business to survive and grow.
However, sometimes it isn’t possible to get all of the key parties, especially all of the key creditors, including landlords and the ATO, on the same page by negotiation alone.
So, what do you do now if there’s still a good core business there that would be profitable, or more profitable, if it wasn’t so burdened by debt and maybe some loss-making locations?
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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