What Are the Different Methods of Financial Restructuring?

Financial reorganization refers to the practice of reorganizing companies that are in financial crisis but still have a turnaround and reconstruction value in accordance with certain procedures to enable the company to recover and maintain. It is a rescue measure for companies that have reached the bankruptcy threshold.

Financial restructuring

Right!

Financial restructuring

With this rescue, on the verge

(1) Reorganization can reduce

The methods of financial reorganization include informal financial reorganization and formal financial reorganization. The former means reaching agreement with creditors

When a company is on the verge of bankruptcy, it is faced with a financial decision to dissolve the company through liquidation or survive through reorganization. The correctness of this financial decision is directly related to the life and death of the enterprise, so it must be carried out carefully.

The important factors that affect the financial decision of reorganization or bankruptcy liquidation are, first of all, the comparison between the corporate reorganization value and the liquidation value. Reorganization value refers to the value recovered by the enterprise after rectification, including equipment upgrades, disposal of outdated inventory, and various improvements to business management; and liquidation value refers to capital assets used by the enterprise The value determined by the degree of specialization includes the realizable value of the asset, as well as the asset cleanup and legal costs incurred during the liquidation process. In general, the priority of reform is to consider the value of the reform over the liquidation value.

Second, the court or creditor's recognition of a corporate reorganization is based on whether the reorganization plan is fair and feasible. Fairness refers to the fact that all creditors are treated equally in the process of corporate reorganization, and the claims of each creditor are confirmed in accordance with the sequence prescribed by laws and property contracts, and must not violate the law. Feasibility refers to the corresponding conditions for reorganization, which mainly includes creditors and debtors. In order for the reorganization to be feasible, the debtor should generally have the following conditions: First, it must have good moral credibility. During the entire reorganization process, the debtor cannot deceive creditors, such as illegally selling corporate property for private use, and damaging the interests of creditors; It is the debtor's ability to provide a detailed reorganization plan to show that it has sufficient confidence to make the reorganization successful; third, the operating environment of the debtor is conducive for the debtor to get out of the predicament and succeed. In order for the reorganization to work, it must be discussed and approved at the creditors' meeting and the willingness to help the debtor rebuild its financial foundation.