What is Corporate Restructuring?

Corporate restructuring provides a company with the opportunity to recover financially and avoid bankruptcy. A critical factor in ensuring a successful restructuring is acting promptly and seeking advice from a lawyer with specialised expertise in corporate restructuring to guide the process effectively.

Steps in the Corporate Restructuring Process

Corporate restructuring in Sweden involves a series of key steps, each vital to achieving a successful outcome. Below is a detailed overview of the process, highlighting the essential stages to navigate for optimal results.

1. Application for Corporate Restructuring
The process begins when the company submits an application for corporate restructuring to the district court. Typically, the company files the application (sometimes with assistance from the proposed restructuring administrator), but creditors can also initiate the process. The applicant usually suggests a trusted restructuring administrator.

2. District Court Approval
The district court reviews the application and approves the restructuring, appointing a restructuring administrator.

3. Debt Freeze and Protection from Creditors
Once the restructuring decision is made, the company’s debts are frozen, providing legal protection against creditor actions.

4. Wage Guarantees for Employees
The restructuring administrator decides on wage guarantees to protect the company’s employees.

5. Notification to Creditors
The restructuring administrator notifies the creditors about the restructuring process, the company’s financial status, and the proposed measures for recovery.

6. Creditor Meeting
A creditor meeting is held at the district court, where all relevant parties are informed about the progress.

7. Restructuring and Operational Changes
The company implements operational changes as part of the ongoing restructuring efforts.

8. Quarterly Review by the District Court
Every three months, the district court evaluates whether the restructuring should continue based on the company’s progress.

9. Debt Settlement Negotiation
If there are grounds for debt reduction, the restructuring administrator initiates a debt settlement negotiation. The administrator presents a detailed financial report, explaining the reasons for the payment difficulties, the possible dividend in a bankruptcy, and any relevant property transfers that may be subject to recovery.

10. Composition Decision
If applicable, the district court will decide on a composition, allowing for the reduction and eventual payment of the company’s debts.

11. Conclusion of the Restructuring Process
Once all the steps are completed, the restructuring process is concluded.

Why Corporate Restructuring is Essential for Companies in Financial Trouble

Acting early and following the legal process can help businesses avoid bankruptcy and recover from financial difficulties. If your company is facing payment issues, it’s crucial to seek legal advice and explore restructuring options.