Insolvency & Corporate Reconstruction

Reconstructions are often used as a means to divide businesses or assets into one or more companies or groups to be owned directly by individual shareholders. Sometimes this is called a reconstruction, a reorganisation or a demerger. There are many high profile reconstructions of listed companies but they are also used for private companies often for family companies after the first generation. The reasons for a demerger or reconstruction may be:-

• To increase value.
• To partition big groups of shareholders.
• To separate assets out to allow the separate sale of part of a business.
• To allow independent development and management of different businesses.

Various alternative methods are available. The choice of the method will depend on:-

• The amount of profits that you have in the business.
• The purpose for which you are carrying out the reconstruction.
• The level of shareholder and creditor approval.
• The tax position of the Company and the shareholders.
• Whether the Company is public or private.
• How the funding and security issues are to work.

Reconstructions are one of the most complex areas of corporate law and careful planning is crucial.

We can offer specialist advice on the initial steps in the process analysing what you have and what you want to achieve. You might need to consider for example contracts, intergroup guarantees, valuations of different parts of the business, employees, pensions, secured lenders, and creditors.

Key Personnel:

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