BUSINESS RESTRUCTURING

Business consulting

In the context of globalization, with the diversity and complexity of business activities, rapid development beyond the economy's control, businesses are facing challenges, difficulties, and pressing requirements to bring businesses up, as well as working on effective development to avoid the risk of elimination in the challenging and ever-changing development process of the market. In order to solve this problem, restructuring is interpreted as an inevitable path for each business, so what is restructuring? Within the limited scope of an article, it's hard to cover all the relevant issues. Phong Partners just hopes to introduce some basic points that can meet your attention about the restructuring business's field.

What is restructuring?

The restructuring can be known as the process of enterprises’ organization and rearrangement based on the old foundation to change the structure and system’s working method. It's a way to fix domestic weaknesses or create " a better state" for enterprises that help the enterprises work more effectively in the future.

A comprehensive reconstruction plan will often cover most of the areas such as organization structure, human resources, management mechanism, administration, activities, processes, and other enterprises' resources. Each enterprise is able to conduct reconstructing with one or many aspects of business, such as the structure, operation process, finance, human resources, debt, management risk system, that aim to improve the efficiency of that department. Besides, business reconstruction can be done by reorganizing the enterprise such as de-merger and merger of enterprises, the transformation of enterprise types, establishment of subsidiaries, branches, etc...

When do you need to restructure?

Restructuring is a very urgent task when businesses are having problems that make their business operate inefficiently. If they continue to operate without structural changes, they will certainly face some serious issues such as heavy losses, risk of bankruptcy, inability to operate, etc...; Or in terms of developing enterprises who want to carry out restructuring so as to optimize production and business efficiency, enhance their brand’s awareness, or simply to develop further. There may be some circumstances like the following ones:

Enterprises are confronting unreasonable problems in the structure that lead to the operation process being inefficient, even stagnant, facing the risk of disintegration or bankruptcy. The cause of this situation can be due to wrong structure, unjustified planning strategy, weak human resources, uncoordinated departments, ineffective management, weak administration, unsuitable financial structure. In this situation, enterprises could implement one of these reorganization activities, for example, shifting the organization structure, HR and administration restructuring, debt restructuring, business strategy changes, etc...
Enterprises want to expand their business scale and turn into stronger and more progressive ones that lead to higher economic efficiency. In this case, the enterprises can restructure depending on the transformation of enterprise type, the merger, and separation of enterprises, the establishment of subsidiaries, branches, etc...

Why do you need to restructure your business?

The restructuring would make businesses reorient their mission, goals, vision, operational strategy as well as restore or remove their businesses' lasting weakness elements and shortcomings. This will be the foundation for businesses to function better, to be able to develop, survive and find a solid foothold in the market. Business restructuring starts from many factors, depending on the situation and needs of each business, according to that, benefits of restructuring usually include:

Reducing operation cost
Enhancing profitability
Removing all barriers limiting labor productivity
Enhancing control effectiveness
Rearranged debt structure with complete financial terms
Having more resources to help businesses grow rapidly
Rearranging and organizing labor, production system, finance system, distribution system, and consuming market to operate effectively;
Helping businesses diversify business fields
Building and developing a brand, increasing the reputation of the business's brand

Increasing business scale, launching more branches thereby increasing market access opportunities, promoting products and reputations of enterprises.

4.Some legal issues need to be solved when implementing restructuring:

For each restructuring option, enterprises will have to carry out different processes and solve corresponding legal issues for each plan. The details are given below:

Regarding human resource restructuring: Rearranging the organizational structure of the enterprise; Resetting job description system, working standard; Evaluating and rearranging personnel, adjusting human resources to manage new policies accordingly; Building the recruitment process and managing human resources of the enterprise: Building the training process, improving the professional qualifications and working skills of the personnel; Solving legal troubles about conditions, personnel restructuring procedures, and the related labor contract issues, etc...
Regarding the business restructuring and internal administration: Identifying core values to re-evaluate the overall operation of the enterprises. Organizing qualified human resources which is capable to carry out business transformation; Building the suitable convert method type for the business; Issues about records, procedures, business transformation processes; Legal issues related to the construction of the management apparatus and the development of internal management documents such as the Charter, Regulations on salary and bonus, Financial Regulations, Labor Regulations, a system of standard documents.
Regarding the restructuring of the unit system; It depends on the methods of de-merger and merger of enterprises, the establishment of subsidiaries, establishment of branches, types of branches and offices transformation: Issues about records, conditions, procedures for implementing each restructuring plan; Building process organization activities with new models, developing the labor utilization plan: Developing internal management document...

Legal services of Phong & Partners Law Firm about business restructuring

Phong & Partners law office will provide the following legal services about business restructuring:

Consulting on a re-evaluation of the current structure and operations of the enterprise;
Consulting and implementing legal procedures on the structure and arrangement of the labor force;
Consulting and implementing legal procedures on business reorganization;
Consulting and implementing legal procedures on business transformation;
Building an internal management documents system following the restructuring requirements;
Consulting and performing other legal services upon the request of enterprises.

If you have any questions about business restructuring, please contact us.

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