If your company is currently facing financial issues, such as corporate insolvency, it may be a good idea to opt for a complete restructuring of your business. In this blog post, D. & A. MacLeod Company Ltd., which caters to companies based across Eastern Ontario, explains everything you need to know about corporate restructuring in the event of a critical financial situation.
What is Corporate Insolvency?
Corporate insolvency arises when a company is faced with liabilities greater than the value of its assets and is struggling to settle its debts and other financial obligations. A company suffering from insolvency is also usually characterized by poor cash flow, essentially spending more than it can earn.
Signs that Your Company May Be Facing Corporate Insolvency
Here are some of the telltale signs that your company is either facing or about to face corporate insolvency:
Poor cash flow
Difficulty in covering payroll expenses
Delayed payments for payroll taxes
Increasing lines of credit and accumulation of unpaid debts
Delayed lease and rent payments due to lack of funds
Operational costs that are becoming increasingly higher compared to company revenues
Dwindling clientele and poor customer retention
And more
Filing for Bankruptcy
While filing for insolvency may seem like the obvious choice in the event of severe corporate bankruptcy, there are also alternative avenues that you may consider instead. Depending on the amount of liabilities that your company has and the extent of your ability to settle existing debts, you may instead consider opting for a division 1 proposal or exploring corporate restructuring.
What is Corporate Restructuring?
Corporate restructuring consists of reorganizing the finances and operational processes of a business in order to improve cash flow and efficiency. Corporate restructuring helps restabilize your company in the event of a financial crisis and can therefore help to safeguard it against complete closure or takeovers by existing creditors.
What to Expect from a Corporate Restructuring
Here are some of the ways in which a corporate restructuring may affect your business:
Increased Capital – Corporate restructuring allows a company to stave off the risk of bankruptcy by increasing its capital through various strategies tailored to its unique business needs.
Operational Restructuring – Corporate restructuring also involves making several considerable operational changes. This may affect the day-to-day running of the business, as well as departmental roles and functions.
Eliminating Unprofitable Business Areas – In an effort to increase the company’s capital, corporate restructuring will also focus on eliminating business areas and ventures that are no longer profitable.
Changes in Staffing – An unfortunate result of corporate restructuring may include the downsizing of certain departments.
Reassigning Positions Within The Company – Corporate restructuring may also involve reassigning certain positions within the company, with several staff members being asked to take on new roles, including leadership ones.
Licensed Insolvency Trustee and Corporate Restructuring Services in Ottawa
Serving Ottawa and the surrounding region, D. & A. MacLeod Company Ltd. has collaborated with many businesses to help them navigate challenging financial situations such as corporate insolvency and bankruptcy. In order to address these issues, our team will work with you to find corporate restructuring solutions tailored to the needs of your business.
Contact us today to learn more about our corporate insolvency and restructuring solutions in Ottawa and across Eastern Ontario. We can meet you in any one of our convenient locations in Ottawa, Kingston, Pembroke, Cornwall, Smiths Falls, Kanata, or Brockville.
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