Page 39 - Manac test 2 Cycle slides

BUSINESSES IN DIFFICULTY

Business recovery and restructuring

• Often, even though businesses find themselves in difficulty,

they may possess some valuable characteristics (i.e. sound
management, an innovative product, etc).

• Sometimes, it is these valuable characteristics that should

be utilised to assist them in recovering from their difficulty.

• A constructive way of dealing with a business in financial

difficulty is to reorganise the business. Reorganisation is the
restructuring of a failing firm in an attempt to continue

operations as a going concern, and may involve any/all of
the following:

• reconstructing the financial structure of the firm/refinancing the firm

• introducing a flatter management structure

• closing down non-profitable operations and products
• divestitures, i.e. selling non-profitable assets, divisions, subsidiaries, etc

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