Restructuring

AAA

DEFINITION of 'Restructuring'

A significant modification made to the debt, operations or structure of a company. This type of corporate action is usually made when there are significant problems in a company, which are causing some form of financial harm and putting the overall business in jeopardy. The hope is that through restructuring, a company can eliminate financial harm and improve the business.

INVESTOPEDIA EXPLAINS 'Restructuring'

When a company is having trouble making payments on its debt, it will often consolidate and adjust the terms of the debt in a debt restructuring. After a debt restructuring, the payments on debt are more manageable for the company and the likelihood of payment to bondholders increases. A company restructures its operations or structure by cutting costs, such as payroll, or reducing its size through the sale of assets. This is often seen as necessary when the current situation at a company is one that may lead to its collapse.

RELATED TERMS
  1. Furlough

    A temporary layoff, involuntary leave or other modification of ...
  2. Auto Supplier Support Program (Auto ...

    This is a $5 billion program funded by the U.S. Treasury intended ...
  3. Recapitalization

    Restructuring a company's debt and equity mixture, most often ...
  4. Shakeup

    A series of events and processes that a company's management ...
  5. Non-Operating Expense

    An expense incurred by activities not relating to the core operations ...
  6. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
Related Articles
  1. The One-Time Expense Warning
    Fundamental Analysis

    The One-Time Expense Warning

  2. The Merger - What To Do When Companies ...
    Investing Basics

    The Merger - What To Do When Companies ...

  3. What Are Corporate Actions?
    Bonds & Fixed Income

    What Are Corporate Actions?

  4. Earnings Sustainability: The Key To ...
    Forex Education

    Earnings Sustainability: The Key To ...

Hot Definitions
  1. Halloween Strategy

    An investment technique in which an investor sells stocks before May 1 and refrains from reinvesting in the stock market ...
  2. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  3. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  4. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  5. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  6. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
Trading Center