Restructuring

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Restructuring (or reorganization ; English restructuring, reorganization ) is in the economy the basic, over the change of the structure and process organization , also business restructuring of an economic subject .

General

The term restructuring comes from reorganization research and includes all profound changes that are intended to interrupt the continuous development of a system . Companies , other associations of persons or states with their subdivisions come into question as economic subjects . The reason for restructuring at companies are usually a previous corporate crisis or serious weaknesses in States and subordinate authorities is internationally also from restructuring ( English debt restructuring ) spoken when in highly indebted countries a debt restructuring ( English debt exchange ) or debt ( English relief debt ) is meant.

Restructuring or “restructuring” is also used synonymously as a euphemism for the dismissal or even mass dismissal of employees of a company or an authority .

activities

The bandwidth of the restructuring ranges from “simple reorganizations in the area of ​​'orderly change' to serious financial restructuring in the sense of a reorganization of the capital structure”. A distinction is made between financial and organizational measures that are intended to bring about a turnaround of affected economic entities. Financial measures include, in particular, austerity , layoffs , budget freezes , consolidation , cost reduction , moratorium , outsourcing , restructuring , debt relief , deferral , debt rescheduling or provisional budget management . Organizationally, a business model change , business process optimization , lean management as an expression of a leaner management process and lean production as an attempt to streamline production processes can be considered. This also includes changes to the organizational and corporate structures as well as changes to the production or economic structure . The process chain of the data processing structure used , the manufacturing technology , the vertical range of manufacture , supply and sales chains as well as horizontal and vertical integration can also be covered by a restructuring .

Many of these measures are largely in-house nature in company split / transfer of business / operational change an external level is reached. Outsourcing is a classic case of business splitting, business transfer is a restructuring at company level, while business change is a restructuring at company level.

What all measures have in common is the reduction in costs . In this case, the focus is usually on personnel costs, so that a restructuring concept usually involves dismissing employees.

These measures should be planned by external management consultancies (e.g. auditors , tax consultants ) and their implementation monitored. You also use a target / actual analysis to determine whether the measures are having the intended effects in the restructuring plan.

Non-banks

Ideally, restructurings anticipate expected future adverse market or cost developments in the company. The rule, however, is that restructuring is carried out at a point in time when losses have already occurred; it is not anticipated, but reacted. The essence of such restructuring cases can often be seen in the fact that a company is no longer capable of restructuring on its own and therefore the only alternative to closing down is restructuring.

When companies in the non-banking sector are restructured, a tax advisor or auditor is usually mandated to first take stock of all company data; this is followed by risk identification with the systematic recording and collection of all risks affecting the company . From this, weak points can be identified through a weak point analysis, which are implemented as part of a restructuring plan with the help of the above measures.

The restructuring of companies is an issue at EU level because it usually has social consequences through layoffs. Art. 154 TFEU is intended to promote the balancing of the social partners through dialogue, which may be necessary in particular with the social effects of operational restructuring measures (redundancies). On the basis of this provision, the European Monitoring Center on Change has identified a total of 8 reasons for restructuring companies.

The insolvency law provides in § 1 InsO that, in addition to liquidation , an insolvency plan can be drawn up to maintain the company. This must be presented to the insolvency court by the insolvency administrator and the debtor as part of the insolvency plan procedure ( Section 218 (1) InsO). The representative part of the insolvency plan describes which measures have been taken or are still to be taken after the opening of insolvency proceedings in order to create the basis for the planned structuring of the rights of the parties involved ( Section 220 (1) InsO), in the formative part defines how the legal position of the parties involved is to be changed by the plan ( Section 221 InsO).

Credit institutions

The financial crises and banking crises of the past have shown that banks (and insurers ) because of its central position in the financial sector in the whole economy acting shocks trigger and even systemically important may be for the economy. For this reason, individual states and the European Union are endeavoring , with the help of legal norms, to subject the financial system to stronger market regulation with the involvement of the competent supervisory authorities .

The Federal Government justified the draft law on the restructuring law as follows: "One of the main lessons from the financial market crisis is that suitable instruments have to be developed in order to either reorganize or liquidate banks that have got into difficulties in an orderly manner". “If a systemically important credit institution gets into economic difficulties, it must be prevented that the difficulties of this one credit institution develop into a national or even global crisis. If such a credit institution is released into an insolvency-related liquidation uncontrolled and unaccompanied by the public sector , this can - as the experience with the insolvency of Lehman Brothers has shown - lead to serious disruptions in the financial system and consequently to a restriction in the supply of credit. These effects are ... effectively avoided "by government stabilization measures that enable business operations to continue."

The Restructuring Act, which came into force in January 2011, only affects the banking industry and aims to make credit institutions less dependent on government rescue measures through greater personal responsibility . To this end, the Credit Institutes Reorganization Act (KredReorgG) regulates that restructuring and reorganization procedures serve to stabilize the financial market through the restructuring or reorganization of credit institutions ( Section 1 (1) KredReorgG). The main difference between the restructuring plan and the reorganization plan is that interventions in third-party rights (interventions in claims or in the rights of the shareholders) can only be provided for in the reorganization plan.

For this purpose, the credit institution concerned must initiate the restructuring process in accordance with Section 2 (1) KredReorgG by notifying BaFin of the need for restructuring . There is a need for restructuring if the requirements of Section 45 (1) sentences 1 and 2 KWG are met. Is a remediation process hopeless, after § 7 1 KredReorgG para. A reorganization process of a reorganization plan be initiated by a complaint with the BaFin template. The structure and function of the reorganization plan is based on an insolvency plan and can contain all possible regulations in the insolvency plan procedure. According to Section 9 (1) KredReorgG, this can provide that claims from creditors are converted into shares in the credit institution with their consent . The debt equity swap is a suitable instrument for gaining corporate influence in the company through a claim that may be difficult to enforce in the crisis. In professional circles, the easier approval of a debt-equity swap is considered to be the most important means for a positive restructuring process. In order to prevent misuse, the prevailing view is that such a change in the bank's capital structure should only be permitted within the framework of an insolvency plan procedure. However, according to Section 12 (2) of the KredReorgG, interference with a claim for which the creditor is entitled to compensation from a security scheme within the meaning of Section 23a of the KWG in the event of compensation is excluded. This also applies to claims that are covered by a voluntary deposit guarantee. Also, capital reductions or capital increases , the performance of assets in kind or the exclusion of subscription rights can be provided in the reorganization plan. The technical implementation of the conversion of a claim into equity takes place in the course of a capital reduction with a subsequent capital increase, whereby the claim is brought in as a contribution in kind.

The KredReorgG provides for a two-stage process with restructuring and reorganization processes, which is intended to create an effective framework for collective negotiation solutions. The procedure is initiated on the initiative of the credit institution itself and is used to deal with crises on one's own responsibility . The first step is a restructuring process with which difficulties can be dealt with well in advance of insolvency through early intervention at management level. The reorganization process, which is in the second stage, is based on the insolvency plan procedure described, but contains some special features: It provides elements to accelerate the process such as streamlined legal protection and it not only enables interventions in the rights of the creditors, but also the involvement of the shareholders, so that they have a promising success Cannot thwart reorganization plan.

The Federal Agency for Financial Market Stabilization (FMSA) has been commissioned to implement the restructuring measures and the restructuring fund. The restructuring fund was set up in December 2010 as a federal fund to finance future restructuring and resolution measures at banks. The funds accumulated in this fund are available to finance future restructuring and resolution measures at systemically important banks. The implementation of restructuring measures and the administration of the restructuring fund will be transferred to the FMSA. All German credit institutions are required to contribute to this fund.

States

In the case of highly indebted countries , the national budget is at the center of restructuring. Permanent budget deficits lead to a steady increase in national debt . Based on the Maastricht convergence criteria for EU member states , the ratio of public debt to nominal gross domestic product (the so-called debt ratio ) must not exceed 60%. In highly indebted countries, this economic indicator is sometimes well above 100%, which leads to increased economic risks outside the EU ( devaluations , high interest rates , hyperinflation , increasing country risk for creditors, soft currency country ).

Outside the EU, the World Bank , the IMF , the London Club and the Paris Club act as Lender of Last Resort . They use all the necessary measures to consolidate the budget and improve economic structures. Your lending is usually linked to strict conditions ( conditionality ), which can interfere with your sovereignty . In the case of heavily indebted EU member states, the specially founded ESM intervenes, which provides highly indebted states such as Greece , Ireland , Portugal , Spain and Cyprus with loans at affordable rates. The bonds issued by the ESM are guaranteed proportionally by the EU member states . Here is a over-collateralisation ( English over-collateralization ) to ensure that the ESM by the rating agencies with the best grade ( English top notch ) AAA unrated is. The aid is of a voluntary nature, because the non-assistance clause of Art. 125 TFEU makes it clear that an EU member state is not jointly liable for the debts of other EU member states.

consequences

Restructuring changes the identity of an economic entity - such as setting goals ( corporate goals , national goals ), organizational structure or performance - so that an intended turnaround can be triggered. However, a restructuring can also fail if the economic structures are not fundamentally optimized, as the case of Argentina ( Argentina crises ) shows. Starting in 1995, the country fell into a profound economic crisis five times .

According to the provisions of the ISDA , the restructuring of a liability can constitute a credit event that triggers a payment obligation on the part of the protection seller of a credit default swap . The prerequisite is that the restructuring is listed in the definitions of the credit event. If, as part of a restructuring of a company or state, a debt relief or just a deferral is provided, the risk of a credit event must be taken into account. Its consequences range from credit termination by banks to the cross-default clause for the immediate maturity of all liabilities to the obligation of protection providers to pay for credit default swaps.

In the case of companies or states as debtors, a restructuring measure can be the subject of the Collective Action Clause . The prerequisite is that the debts concerned are securitized in bonds , the terms of which contain this clause or are subject to a law that provides for the application of the clause for these bonds. Then the majority decision of the bondholders also binds the negative minority.

In addition to the frequent failure to achieve the ultimate goals resulting from restructurings often high mental stress for those involved: uncertainty about their own future, the threat of job cuts, new tasks and requirements associated with work intensification , leading to high labor and stress levels of employees including Executives . The report of the European group of experts on "health in restructuring / HIRES" explicitly shows the connection between "survived" restructuring and health consequences.

Restructuring in EU law

The Directive (EU) 2019/1023 of 20 June 2019 on prevention restructuring framework, through debt relief and disqualifications as well as measures to increase the efficiency of restructuring, insolvency and debt relief process and amending Regulation (EU) 2017/1132 (Directive on restructuring and bankruptcy) aims to harmonize the differences that exist in the EU Member States in the range of procedures available to debtors in financial difficulties to restructure their businesses. Therefore, according to Art. 1 Para. 1 lit. a) this Directive provides preventive restructuring frameworks available to debtors in financial difficulty in the event of a probable bankruptcy in order to avert bankruptcy and ensure the debtor's viability. It defines in Art. 2 Para. 1 No. 1 restructuring as "measures aimed at the restructuring of the debtor's company and to which the change in the composition, the conditions or the structure of the assets and liabilities of a debtor or any other part of the Capital structure includes, for example, the sale of assets or business units and, if provided for by national law, the sale of the company as a whole and any necessary operational measures or a combination of these elements ”. It provides for restructuring officers who use early warning systems and draw up and implement a restructuring plan. The debt relief period is three years (Art. 21), the transformation into national law must take place by July 17, 2021 (Art. 34).

literature

  • Ingo Hamm, Rudi Rupp: Co-determination in the case of sale and restructuring , options for works councils to act in the event of operational changes, Bund-Verlag, Frankfurt, 2008, ISBN 978-3-7663-3721-4 .
  • Ulrich Hommel, Thomas C. Knecht, Holger Wohlenberg: Manual Enterprise Restructuring , 2006, ISBN 978-3-409-12654-0 .
  • Frank Roselieb / Marion Dreher (eds.), Learning from successful crisis managers , case studies on restructuring and turnaround management, Erich Schmidt Verlag, Berlin, 2008, ISBN 978-3-503-10090-3 .
  • Oliver Haag: Restructuring and works constitution , Hartung-Gorre Verlag Konstanz, 1997, ISBN 3-89649-043-5 .
  • Thomas Kieselbach, Claude Emmanuel Triomphe: Health in Restructuring (HIRES). Recommendations, National Responses and Policy Issues in the EU , 2009, ISBN 978-3-86618-498-5 .
  • Peter Faulhaber, Norbert Landwehr, Hans-Joachim Grabow: Turnaround Management in Practice , Campus-Verlag, Frankfurt am Main - New York 2009 ISBN 978-3-593390017 .

Web links

Individual evidence

  1. Johannes G Burtscher, Value-Oriented Crisis Management , 1996, p. 60
  2. Johannes G Burtscher, Value-Oriented Crisis Management , 1996, p. 61
  3. Wolfgang Balze / Wolfgang Rebel / Peter Schuck, Outsourcing and restructuring of companies under labor law , 2007, p. 52
  4. in almost all restructurings, staff are cut; Downsizing is the most common measure: Reduction in personnel expenses / downsizing: in 99% of all companies surveyed; Roland Berger Strategy Consultants, November 2003, study: Restructuring in Germany - earlier, faster, harder, but not yet good enough.
  5. Around 68% of German companies only recognized the need for restructuring when the earnings or liquidity crisis had already occurred; Roland Berger Strategy Consultants, November 2003, study: Restructuring in Germany - earlier, faster, harder, but not yet good enough.
  6. ^ BAGE 43, 13
  7. Eurofound, Restructuring , November 2010
  8. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, the establishment of a restructuring fund for credit institutions and the extension of the statute of limitations for corporate liability under company law (Restructuring Act) , p. 1
  9. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate liability under company law (Restructuring Act) , p. 40
  10. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate liability (Restructuring Act) , p. 45
  11. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate body liability (restructuring law) , p. 49
  12. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate liability under company law (Restructuring Act) , p. 50
  13. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate liability under company law (Restructuring Act) , p. 50
  14. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate liability under company law (Restructuring Act) , p. 40
  15. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate liability under company law (Restructuring Act) , p. 42
  16. BT-Drs. 17/3027 of September 27, 2010, draft of a law on the restructuring and orderly liquidation of credit institutions, on the establishment of a restructuring fund for credit institutions and on the extension of the statute of limitations for corporate liability under company law (Restructuring Act) , p. 42
  17. Birgit Köper / Götz Richter, Restructuring in Organizations and Possible Effects on Employees ( Memento of the original from April 7, 2016 in the Internet Archive ) Info: The archive link was automatically inserted and not yet checked. Please check the original and archive link according to the instructions and then remove this notice. , BAuA 2012. @1@ 2Template: Webachiv / IABot / www.baua.de