What exactly is corporate restructuring?
This a very broad term but it is helpful to think of it as a material change in a company’s bank facilities, capital structure, operations or organisational structure. People often assume it is entirely related to a company’s debt – a common misconception.
When should companies opt for it? Is it a last resort option?
No, as it does not necessarily reflect a major failing in the management of a business. A company should think about restructuring when it anticipates that one or more of its capital, operational or organisational structures are no longer functioning optimally. Often this can be a result of a change in market conditions, as we have seen during the global downturn in recent years.
A business that thinks in a proactive way about restructuring should be lauded, not pilloried.
What is the process of a restructuring?
There is no set practice and the ways a restructuring is carried out can vary significantly. For example it can be solely executed by a single company or it can depend on discussions with external stakeholders such as a bank. A common theme in successful restructurings is the utilisation by businesses of experienced restructuring professional advisors to support and advise them through the process.
Is it particularly relevant in the GCC today? If so, why?
Historically, restructuring had been less visible in the GCC than in other markets. The nature of the global economy has altered the situation and it is currently the subject of much focus in the region as the business environment becomes more developed.