Corporate restructuring assignments involve devising and implementing schemes of arrangement to help troubled companies return to profitability. A scheme of arrangement can operate formally with court sanction, or informally by agreement with creditors.
Every scheme of arrangement is unique. The most common features of successful schemes include creditor balances being written down / postponed, rents being reduced, and new capital being introduced either by the directors or from other sources.
For a scheme of arrangement to be successful it will be necessary to present a credible proposal to the company’s shareholders, creditors, and other affected parties. Each of the affected parties must be satisfied that their interests will be served by accepting the proposed scheme of arrangement. Creditors are often suspicious of restructuring proposals put to them by company directors. Our experience is that the involvement of external advisors can help to allay their doubts.
It may occur that a minority of parties affected will refuse to approve a scheme of arrangement. In these circumstances it may be possible to make the scheme binding on all parties by obtaining court sanction, subject to criteria set out in the Companies Acts being satisfied.
The success of any restructuring proposal will be substantially affected by whether it is implemented at a sufficiently early stage.
We have worked with many clients on the preparation and implementation of successful schemes of arrangement. We would be pleased to advise and assist directors of troubled companies who wish to restructure their affairs.