Restructuring

Restructuring or reorganization (or turnaround ) is a manifold in the economy used term, as the remedial measure was to improve the organizational, business or market conditions, a company's or worst, coping with a corporate crisis to content. In States and subordinate authorities also restructuring ( "debt restructuring" ) is internationally speaking, if in highly indebted countries debt restructuring ( "debt exchange" ) or a debt ( "debt relief" ) is meant. Restructuring or " restructuring " is used interchangeably as a euphemism for the dismissal or even mass dismissal of employees of a company or government agency.

Business

Ideally, restructurings take expected future adverse market or cost developments in the company anticipated. Rule, however, is that restructuring is carried out at a time, have already occurred to the losses; it is not anticipated, but reacts. The essence of such reorganization cases can often be seen in the fact that a company is no longer rehabilitation potential in themselves and therefore there is to decommission only the alternative of restructuring.

Possible restructuring can be systematized inter alia as follows:

• Outsourcing (outsourcing) of business units or departments that do not belong to the core business or are lossy structurally. The aim is to avoid or reduce losses.
• As part of the redesign of business process optimization / streamlining of internal processes is sought with the aim of time and cost between order and delivery ( " throughput " ) to save.
• Change of market orientation, the business model or the product spectrum. Target is a market more efficient product mix, sales and profits.
• Through leveraging of potential synergies and elimination of parallel production costs are to be reduced in order to increase chances of winning.

These measures were largely in-house nature, so when operating split / transfer of business / operational change to a higher level is reached. Outsourcing is a classic case of corporate spin-offs, transfer of operations is a restructuring at the enterprise level, while the operational change is a restructuring at company level. Common to all measures is to reduce the cost. These usually are the staff costs in the foreground, so that a restructuring plan usually has the dismissal of workers to the content.

In addition to the frequent failure to achieve the ultimate goals resulting from restructurings often high mental stress: uncertainty about their own future, the threat of job cuts, new tasks and requirements associated with work intensification, leading to high stress levels of employees (and executives). The report by the European Expert Group on "health in restructuring / HIRES ) " explicitly shows the relationship of " survived " restructuring and health consequences.

At EU level, therefore, the Company restructuring is discussed, because this social consequences are usually connected through layoffs. So to Article 154 TFEU promote the equalization of social partners through dialogue, which may be necessary, especially with the social effects of corporate restructuring ( layoffs ). Based on this determination, the EMCC has (European Monitoring Centre on Change) identified a total of eight reasons for restructuring the company.

States

In highly indebted countries is spoken by restructuring when action must be taken nationally and / or internationally, in the context of budgetary consolidation have a relief of the repayment structure, the interest expenses or even debt relief to the object. The restructuring is especially warranted when a state is threatened with insolvency. While the debt relief leads to a reduction of the national debt, existing short-term debt can be consolidated into long-term. This has on the one hand an equalization of the repayment structure, on the other hand may also interest relief result, as long as no inverted yield curve is present. The debt burden of a country is particularly problematic when the gross domestic product falls sharply by economic crises and therefore falls below a critical threshold (see bankruptcy ). Furthermore, a highly indebted country can be forced by rising unemployment to pay higher social spending, raise its budget deficit and thus the debt. In highly indebted states account for a restructuring of the IMF, the London Club and the Paris Club. Your restructuring aid are partially connected with hard conditions ( conditionality ), which represent a more or less strong intervention in the sovereignty.

In highly indebted EU countries also there is the - purely voluntary - Assistance by the EU into account, because the basis of express no-bail -out clause ( Article 125 TFEU ) ensures that a euro - participating country not for debts of other Member States automatically liable. Art.136 TFEU provide for mechanisms that will ensure the stability of the euro. From this provision, the supranational EFSF and its successor organization ESM have emerged, which are highly indebted countries such as Ireland, Portugal and Greece with loans at reasonable interest rates available. The bonds issued by EFSF bonds are guaranteed a proportionate basis by the Member States. This represents an over- collateralization ( "over- collateralization " ) sure ("top notch" ) are rated AAA that these organizations by the rating agencies with the highest rating.

Effects

The restructuring of a liability may under the provisions of the ISDA constitute a credit event triggering a payment obligation of the guarantor of a credit default swap. The prerequisite is that the restructuring is enumerated in the definitions of the credit event. If, therefore, as part of a restructuring of a company, a debt or merely a deferral provided, the risk of a credit event must be considered. Its consequences range from the credit termination by banks on the cross-default clause to demand immediate repayment of all liabilities to the payment of duty of protection providers in credit default swaps.

For companies or States as a debtor may be subject to the Collective Action Clause a restructuring. The prerequisite is that the affected debt securitized bonds that contain this clause or covered by a law that for these bonds providing for the application of the clause. Then the majority decision of the bondholders also binds the negative minority.