Reorganization and restructuring

Both terms describe special measures and changes that end a crisis-ridden development and enable a company to continue its existence. The reorganization includes measures to improve the determinants of the performance economy, the restructuring regulates the contracts in the financial sector.
If the crisis has crept in over a longer period of time, then it often manifests itself in an unfavorable composition and structure of the asset positions. Perhaps the wrong divisions were kept or too little emphasis was placed on cutting costs or on innovation. Improvements have to start with the assets on the one hand and the business plan on the other. So positions in management also have to be reconsidered.

Such measures are known as reorganization. The reorganization usually begins with a survey of strengths and weaknesses and the company is focused on a few business areas. For this purpose, areas that do not belong to the core business are outsourced and sold or liquidated. Measures to reduce costs and increase sales are also being taken.

Wenn die Krise eher plötzlich durch gravierende Veränderungen der Umgebung und der Märkte eingetreten ist, wenn also gewisse, mit Risiken behaftete Positionen eine nachteilige Wertentwicklung erfahren haben, kommt es zu einer entsprechenden Reduktion der Eigenmittel im Vergleich zum Fremdkapital der Unternehmung. Wenn man so will, war die Unternehmung eigentlich gut geführt, nur hatte sie Pech gehabt. Vielleicht hatte es Fehler im Risk management gegeben, aber soweit die leistungswirtschaftliche Seite betroffen ist, besteht kein Handlungsbedarf.
Actually, in such a situation, the company should be continued, and this is also the vote of the equity investors who have lost a lot and can hardly lose anymore, but see the opportunity for future profits. However, in a situation of low or low equity, there is a conflict of interest between the equity investors and the creditors.

The creditors see that the debt capital is more at risk if they are continued and would therefore rather liquidate it, because then their claims can still be fulfilled or almost completely fulfilled. In order to mitigate this conflict of interest and to ensure that the lenders also consent to a continuation, they must be offered special compensation for the increased risk. To this end, the financial contracts are renegotiated. For example, the creditors are given options with which they can participate in the result if they are successful. Such renegotiation of financial contracts is known as restructuring.

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