In today’s rapidly changing economic conditions, many businesses need a restructuring process in order to maintain their competitiveness and ensure financial sustainability.
Corporate restructuring does not only mean the reorganization of debts, but also the reorganization of the entire structure of the company – including its financial, legal, administrative, and operational aspects.
This process is carried out to support the growth of the business, overcome periods of crisis, or adapt to new investment opportunities.
So, what is corporate restructuring, what types does it have, how is it carried out, and what should be considered legally?
What Is Corporate Restructuring?
Corporate restructuring is the process of reorganizing a company’s existing organizational, financial, or legal structure in line with changing market conditions and strategic objectives.
This reorganization may include;
The restructuring of debts,
Company merger or acquisition transactions,
Changes in the partnership structure,
Renewal of production, marketing, or management systems,
Optimization of tax and legal obligations.
In other words, restructuring is not merely a financial recovery plan, but a comprehensive strategic transformation that strengthens the company’s long-term competitive advantage.
Reasons for Corporate Restructuring
The decision to restructure may be taken by companies for many reasons. These generally arise from economic, financial, managerial, or legal factors.
The most common reasons can be listed as follows:
Financial Difficulties: An increase in the company’s debt burden, deterioration of cash flow, or difficulties in loan repayments.
Changes in Market Conditions: Factors such as the emergence of new competitors, technological transformation, or a decrease in demand.
Managerial Problems: Inefficient management structure, incorrect investment decisions, or internal control deficiencies.
Need for Investment or Growth: The company may need to expand into new markets or strengthen its capital structure.
Compliance with Legal Regulations: Mandatory changes required under tax, commercial, or competition law.
In short, the restructuring process appears both as a way out of crisis and as part of a growth strategy.
Types of Corporate Restructuring
Restructuring may be carried out in different forms depending on the needs of the company. Within the framework of the Turkish Commercial Code (TCC) and relevant legislation, the most common types of restructuring are as follows:
1. Financial Restructuring
This involves restructuring the company’s debts, reducing interest rates, extending maturities, or finding new sources of financing.
Debt restructuring agreements concluded with banks fall within this scope.
The aim is to improve the company’s cash flow and eliminate the risk of bankruptcy.
2. Legal and Corporate Restructuring
In this type, the company’s legal structure, partnership ratios, or management bodies are reorganized.
Transactions such as converting a limited liability company into a joint stock company, increasing the number of partners, or relocating the company’s headquarters fall within this scope.
3. Operational Restructuring
This includes reorganizing production, distribution, marketing, or human resources processes.
The aim is to increase the company’s efficiency and competitiveness.
4. Company Mergers and Acquisitions (M&A)
The merger of two or more companies or the acquisition of one company by another is one of the most important forms of restructuring.
In this way, capital accumulation increases, economies of scale are achieved, and market share expands.
5. Tax and Organizational Restructuring
These are internal arrangements made to reduce companies’ tax burdens or to ensure better compliance with legal regulations.
Such arrangements are generally carried out through the coordinated work of financial advisors and lawyers.
How Does the Corporate Restructuring Process Work?
Restructuring consists of planning and implementation stages. In order to achieve a successful outcome, the following steps should be followed:
Status Analysis and Risk Assessment:
The company’s current financial condition, debt burden, asset structure, and operational performance are analyzed.
Strategic Planning:
The objectives of restructuring are determined. The areas in which changes will be made and the expected outcomes are clarified.
Legal and Financial Advisory:
The legal framework of the process is prepared. Contracts, merger, or acquisition documents are legally drafted.
Implementation Phase:
Approvals are obtained, contracts are signed, and required registration procedures (e.g., Trade Registry) are completed.
Monitoring and Evaluation:
After restructuring, performance measurement is carried out and it is checked whether the planned objectives have been achieved.
Obtaining legal counsel at every stage of this process helps prevent potential disputes and administrative penalties.
Points to Consider in Restructuring
Corporate restructuring includes many technical details from the perspectives of commercial law, tax law, and labor law.
Therefore, the following issues should be taken into consideration during the process:
The approval of company partners should be obtained, and board of directors’ resolutions should be prepared in accordance with proper procedure.
Contracts and protocols must be approved by a notary public or the trade registry.
In cases of acquisition or merger, employee rights and third-party receivables must be taken into account.
Required permissions must be obtained from the Competition Authority.
Compliance with tax legislation must be ensured, and potential tax penalties must be prevented.
If these points are ignored, the restructuring transactions carried out may be deemed invalid or may lead to legal disputes.
Conclusion
Corporate restructuring is not merely an economic recovery plan, but also a strategic legal process that directly affects the future of the business.
Every decision taken in this process closely concerns the financial structure, partnership relations, tax obligations, and commercial reputation of the company. Therefore, restructuring should be carried out not only with financial analyses, but also with the support of legal counsel. A conscious, planned, and legally compliant restructuring not only enables the company to overcome crises, but also ensures sustainable growth, increased competitiveness, and corporate stability.
