Any procedure that significantly modifies a company’s debt, operations, legality, or structure is referred to as restructuring. When a firm is about to go bankrupt or has a major problem, corporate restructuring is employed to turn it around. It nearly usually entails reorganizing the legal, ownership, operational, fiscal, and other business structures to make the firm more lucrative, more organized, or adapt to changing market conditions and demands.
Why to Reconstruct:
In most cases, official legal processes initiate restructuring; nevertheless, administrators can initiate this process more explicitly within the company to return it to profitability.
If you are wondering that restructuring is simply a legal concern when a firm is insolvent or bankrupt, the answer is no. Many faltering businesses are forced to reorganize to avoid bankruptcy. If a firm is drowning in debt, consulting a turnaround and restructuring; consulting a lawyer in order to discuss the available solutions can be beneficial.
Laws Governing Restructure:
There are no established acts or regulations for corporate restructure in Bangladesh. However, other acts regulate corporate reconstruction. They include the Companies Act 1994, the Bankruptcy Act 1997, the Bankruptcy Rule 1997 and Money Loan Court Act 2003. Anything regarding the rearranging of the legal, ownership, operational, fiscal, other company establishments, winding up, and liquidation is incorporated in the Companies Act 1994.
Again, if a company goes bankrupt, then the annulment of adjudication, composition and scheme of the arrangement, re-organisation, discharge and undischarged of the bankruptcy and the final recognition of the property are all provided in the Bankruptcy Act 1997 and the Bankruptcy Rule 1997. (ref. Bankruptcy Act 1997).
Generally, people deposit their money to the Banks for proper investment and transaction. However, sometimes, the problem arises when some borrowers become defaulters of repayment of the borrowed money and the Banks fall in a critical situation. Therefore, the Government has enacted a particular law, the Money Loan Court Act, 2003 (popularly known as Artha Rin Adalat Ain 2003), for the accurate and speedy realisation of the money from the defaulter borrowers.
These two courts are operating parallel to one another. Artha Rin Adalat Ain creates liability on the mortgaged property of the debtor. At the same time, the bankruptcy law brings the debtor into a legal restraint by creating liability on the total property of the debtor.
The Bankruptcy Act 1997 deals with the bankruptcy of individuals only. However, international bankruptcy law has attained a new dimension in the near past, with the development of concepts like cross-border insolvency and the formulation of the UNCITRAL Model Law on cross-border insolvency 1997. As a UN member state, Bangladesh has the responsibility to follow the model law.
What Corporate Restructure Lawyers Do?
Corporate restructuring enables businesses to restructure business practices that are harming their bottom line, restructure debts, and optimize organizational structures and processes to re-establish their viability. While a good reorganization might result in a hefty settlement, a failure to restructure can put a firm out of business. That is why it is crucial that one must engage a seasoned restructuring lawyer to assist you in planning, organizing, and managing the process.
Lawyers that specialize in debt restructuring work with either borrowers or creditors. Their work would be non-controversial, and it would entail negotiating transactions and repayment arrangements to allow the creditor to settle the amount without going bankrupt. Bankruptcy attorneys work for both debtors and creditors, but their job is more controversial since they are involved in all phases of the insolvency process, from negotiating business voluntary arrangements through administration and receivership. They are also a part of the liquidation process. The nature of the work will be largely determined by the sort of company and the customers it represents.
In Russell and Partners, we counsel a variety of stakeholders facing financial challenges and deal with a wide range of transactions, including restructuring and rescue securitisations, work-outs, debt rescheduling, debt to equity swaps, corporate finance transactions, structured receiverships, corporate restructurings with or without insolvency processes, and the exchange of bankruptcy claims.