How Do You Create a Business Restructuring Plan?

A business restructuring plan is a medium- to long-term strategy adopted by a company to overcome periods of crisis, financial instability, or organizational instability. It involves various areas: primarily the legal area, as it must comply with current corporate, tax, and labor regulations. It is operational in that the objective is to improve efficiency, reduce costs, and reorganize the structure in order to reposition the company where necessary and prioritize investments that guarantee a long-term return.

In this guide, we will address the complexity of the topic from a global perspective, providing advice and solutions to entrepreneurs and investors seeking concrete solutions to complex challenges (for example: how to avoid bankruptcy).

Understanding Business Restructuring

Restructuring business plan is the deliberate reorganization of a company to deal with stressful situations or reposition itself in a different market reality. The scope can be financial (debt modification, maturity modification, adjustment of capital instruments), operational (simplification of supply chains, closure of sites, adjustment of shared services), organizational (realignment of roles, clarification of responsibilities), or strategic (portfolio choices following a strategic review). For managers and boards, understanding what is workforce restructuring is often part of this broader process, as staffing decisions strongly impact both costs and long-term competitiveness.

It is often necessary to deal with external market disruptions—such as economic crises, regulatory changes, etc.—or to address internal cost inefficiencies within the company.

Others wait for constraints to tighten or liquidity to shrink and must act responsively, with tighter paths and less room for manoeuvre. A corporate restructuring effort that begins before insolvency cases occur will always offer better options.

Assessing the Current State of the Business

Starting with an objective assessment is the first step in evaluating the business state.

• Gather current financial data: Factors that determine working capital and short-term liabilities, for example. Create a 13-week cash forecast that matches bank reality, then a 12-month forecast for lenders and the team.
• Assess operational inefficiencies and management structures: Verify that internal processes and organizational structure are effective. Role overlaps or a lack of leadership only contribute to financial problems.
• Add a risk perspective: regulatory exposure, regulatory disputes, litigation, single supplier dependency, and IT position.
• Involve external advisors: Legal, banking, and corporate restructure consulting will bring objectivity and clarify where a company can restructure quickly and where approvals or consents will slow down the process.

Setting Restructuring Goals and Priorities

Resets without objectives lead to drift. Set short-term objectives (stabilization of liquidity, reset of costs, tolerance with key creditors) and long-term objectives (restoration of margins, asset rotation, repositioning in the market).

Also define a set of success parameters: revenue targets, debt ratios, contribution margin per line, financial leverage, and interest coverage.

Prioritize based on impact and feasibility. Units that burn cash but have significant value can be restructured, while those with poor prospects and a heavy burden should be sold.

Designing the Restructuring Framework

Choose the framework that most effectively suits the situation. Some companies need to restructure by downsizing and redesigning processes; others need divestitures to unlock trapped value; still others may pursue a merger or legal reorganization to restructure complex organizational charts. 

If the decision is to restructure the legal structure, prepare documents for the board of directors describing the roles of subsidiaries, intercompany balances, and the stages of dissolution. If a spin-off is planned, identify the activities involved, transitional service agreements, and system separation.

Sometimes leadership changes are necessary. Record these formally: committee mandates, delegations of authority, and voting thresholds. 

Preparing a Detailed Business Restructuring Plan

To prepare a detailed business restructuring program—useful for international organizations but also for small businesses—certain points must be formalized.

• Executive summary: This is a general summary of the restructure business plan, listing the current situation of the company—including the main problems—and the objectives to be pursued.
• Background and diagnosis of the problem: An analysis of the crisis causes. It is very important to demonstrate that management understands the source of the difficulties.
• Restructuring actions and reasons: This section should list the actions taken (such as cost cutting, refinancing, asset disposals, organizational changes, etc.) along with the reasons behind them.
• Legal and compliance aspects: What measures have been taken to comply with regulations? This is essential to avoid future risks and penalties.
• Financial projections and resource allocation: The program must show financial indicators such as cash flow forecasts and resource allocations to demonstrate its feasibility.
• Stakeholder communication strategy: Prepare a program on how and when to inform all stakeholders of the changes.

Obviously, to give substance to the program, it is essential to list timelines and measurable results to keep operational progress under control at all times.

Legal and Regulatory Considerations

Each jurisdiction has different rules on corporate restructuring. For example, some have specific insolvency thresholds above which bankruptcy must be declared. Others impose limits on staff cost reductions or have tax implications for extraordinary transactions such as mergers or acquisitions.

In the case of M&A, notifications or registrations with the competent authorities are required, subject to the approval of creditors and shareholders.

The transition does not exempt companies from maintaining compliance. The company must continue to protect the rights of its employees by filing tax returns regularly.

Communicating the Plan Internally and Externally

Communicating decisions regarding corporate restructuring is a fundamental step in involving all stakeholders. The first step is therefore to identify those involved: employees, board members, partners, creditors, and investors.

Each of them must be informed of the choices and motivations behind the scenes, so as to build a relationship of trust even in times of crisis.

It is equally important to be clear and transparent in order to protect the company’s reputation while complying with disclosure requirements.

Implementing the Restructuring Plan

Execution benefits from a simple structure.

• Appoint a small PMO or steering team with clear reporting lines and the authority to restructure programs as circumstances change.
• Take gradual action: cost adjustments, contract renegotiations, process redesigns, and asset sales.
• Monitor execution using dashboards and periodic reviews: A delay upstream can compromise three actions downstream. Use dashboards that show liquidity, margin per unit, staff movements, and delivery performance.

If an initiative isn’t delivering, adjust or replace it; don’t let small mistakes accumulate. When shared services are involved, ensure that service level agreements survive the change so that frontline operations continue to function.

Monitoring Progress and Making Adjustments

To monitor the effectiveness of a restructuring program, it is necessary to set up a structured and continuous control system.

• Periodic reporting – Define precise intervals, such as monthly financial reviews and weekly updates with operational teams. 
• Key indicators – Monitor improvements in cash flow, operating performance (productivity, cost reduction, margins), and stakeholder perceptions (creditors, employees, customers).
• Decision-making flexibility – The data collected should serve as a basis for course correction: accelerating certain measures, renegotiating with partners, or, if necessary, taking more drastic action. The external environment (market, interest rates, regulations) should be integrated into the analysis to keep the strategy realistic.

Post-Restructuring Integration and Stability

When the heavy lifting eases, move from triage to permanence. Stabilize systems and hand transitional tasks back into the line. Revisit corporate direction and translate it into a durable business strategy—portfolio mix, channel focus, and new investment thresholds. Conduct internal audits to confirm that accounting, tax, and legal filings reflect the new reality. Where the group used temporary exceptions, unwind them and return to standard controls. Consider governance adjustments that prevent drift—committee remits, decision rights, and a calendar that keeps leadership focused on margin and cash. A restructured company effort that ends without integration simply postpones the next crisis.

FAQs

What is a business restructuring plan?

A structured roadmap that realigns a company financially, operationally, or legally so that it can continue to operate under sustainable conditions.

Who is responsible for drafting a restructuring plan?

It is prepared by senior management, with input from legal, financial, and operational advisors; the board of directors approves and oversees it.

How long does a restructuring process take?

Most initiatives last between three and twelve months, depending on the size, consensus, and number of jurisdictions involved.

Can restructuring avoid bankruptcy?

Yes. If initiated early and implemented with discipline, a corporate restructuring can restore solvency and avoid formal proceedings.

What are the risks of restructuring?

Loss of talent, damage to reputation, delays in execution, litigation, and regulatory scrutiny if communications and disclosures are mishandled.

Do I need government approval to restructure a business?

Not always. Mergers, divestitures, personnel changes, and cross-border transfers may require declarations or notifications, and some service sectors require specific approvals.

References

PwC. (2021). Business restructuring: Practical steps to navigate financial distress. PwC. https://www.pwc.com/us/en/services/deals/business-restructuring.html

EY. (2022). Reshaping results: Corporate restructuring in uncertain times. Ernst & Young Global. https://www.ey.com/en_gl/restructuring/reshaping-results

Insolvency Service. (2023). A guide to restructuring and insolvency procedures. UK Government. https://www.gov.uk/government/publications/a-guide-to-restructuring-and-insolvency