Company reorganization consists in comprehensive perfection and harmonization of all structural elements of a company in line with contemporary conditions of business activity in Russia. The main objects of reorganization are:
- Governance system.
- Organizational structure.
- Company’s receivables and payables.
* Reorganization of the governance system consists in the raising of the efficiency of company governance, personnel development and the selection of competent candidates for vacant positions; as well as in a reform of the administrative staff with the purpose to create (develop) units necessary for a successful business.
* Reorganization may progress along the following avenues:
- definition of the most efficient kernel of the company and liquidation of accompanying (often inefficient) productions. It may be carried out through a variety of legal procedures of business fragmentation (division, extraction, creation of a new legal entity, etc) or its strengthening (merger, annexation);
- a reform of the inner system of planning and accounting and defining for that purpose cost, profit and financial responsibility centers.
* Reorganization of assets conducted in order to boost the efficiency of company’s property is mostly associated with liquidation (sale, transfer, etc) of excess and surplus property, and therefore with the reduction of fixed costs and a lowering of the break-even point. Moreover, “bottlenecks” in technical and technological equipment of the company are detected and ways of their debottlenecking are defined.
* The rescheduling of debts payable and receivable presumes:
- agreements with the creditors on terms of satisfaction of accounts payable that would be admissible for the company. The main objective is to gain certain concessions from the creditors: a reduction of the total amount of the indebtedness, an exemption from interest payments, an interest rate reduction and an adjournment of payment;
- agreements with the debtors on terms of collection of receivables, admissible for the company; and
- a resolution of the authorized governmental agency on the deferral of installment payments to the budget and state off-budget funds.