Restructuring measures
Restructuring measures are any changes made by the debtor to the functioning of his business with the aim of improving his economic situation. They can be one-off as well as take the form of long-term processes. Their effectiveness should be assessed on an ongoing basis.
In the restructuring proceedings, the description of the restructuring measures as well as the schedule for their implementation are part of the restructuring plan (the initial characteristics of these measures and the preliminary schedule for their implementation are already part of the initial restructuring plan). There is no doubt that due to the purpose of the restructuring proceedings, these are the key parts of the aforementioned documents. Well thought-out and effectively implemented restructuring measures provide the necessary foundation to rebuild creditors’ confidence, with the final result that they will endorse the arrangement.
Taking into account the current practice of proceedings aimed at restoring the debtor’s liquidity, three basic areas of application of restructuring measures can be distinguished:
- organizational changes in the scope of conducted business activity (in particular core activity) – restructuring measures aimed at optimizing the conducted activity include, inter alia, changing the business profile, changing the portfolio of products offered, reducing the scale of operations, reducing employment, changing and flattening the organizational structure, outsourcing services,
- changes to the debtor’s fixed assets – restructuring measures to reorganize the asset structure include, inter alia, sale of unnecessary assets (in particular not used in core activities), limitation of space used in core activities, limitation of office space (administration), change of the legal form of using the property (rent, lease, leasing),
- changes in the area of long- and short-term financing – restructuring measures aimed at optimizing the debtor’s financing structure include:
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- in the long-term perspective – changing the financing structure, in particular increasing the share of equity in the structure of liabilities, obtaining new market financing, possibly obtaining public aid, in particular public aid for restructuring (e.g. granted by Agencja Rozwoju Przemysłu SA, under the so-called New Chance Policy):
- in the short term – optimization of net working capital management, negotiations with contractors in order to extend the liabilities turnover period (obtaining a trade credit and shortening the receivables turnover period, changes in inventory management, short-term investment of surplus cash, monitoring of bad debts, VAT recovery from invoices unpaid by contractors.
It is worth emphasizing that in the remedial proceedings, the implementation of restructuring measures is supported by remedial measures. They facilitate the effective and quick implementation of remedial measures, which directly translates into the effectiveness of the entire restructuring procedure. The remedial measures include: the possibility of withdrawing from a mutual agreement which has not been performed in whole or in part before the date of opening the remedial proceedings, by the administrator, with the consent of the judge-commissioner, facilitation in the field of employment restructuring, the possibility of disposal of property with the effect of an enforcement sale, with the consent of the judge-commissioner.
Of course, one of the main goals of entrepreneurs entering the restructuring process is the planned debt restructuring, which in practice is implemented by voting of creditors on the submitted arrangement proposals, providing for deferred payment dates or partial forgiveness of liabilities. In the case of profitable companies, the problems of which are not structural in nature, restructuring is often limited to the restructuring of liabilities.
