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What is the Restructuring ?
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.A significant modification made to the debt, operations or structure of a company.The hope is that through restructuring, a company can eliminate financial harm and improve the business.
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ATAHK 's Explains' Restructuring'
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 .If a company is having trouble making payments on its debt, usually 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.
System of asset restructuring
The system of asset restructuring was introduced and it became functional for the first time in 2011. Now it is working efficiently in many companies of different countries. Many of the assets restructuring companies are government owned companies. These include about 50 % or 51 % shares of government as well. The main objectives of these asset restructuring companies is basically to maintain and operate the specific registration system. The main preference of this company is to give preference to security of money over property.
Registration of asset restructuring
Registrations are made on part of the individuals and interested candidates so as to get security for their debts and loans. However attaining the loans and debts would be restricted under the Act of asset restructuring. All this has been made possible by efficient functioning and structuring of the asset management and restructuring.
Licensing of asset restructuring companies
These asset reconstruction companies are now being established under license. These legalized and licensed companies were established under the Companies Act of 1956. Basically the establishment of these asset restricting companies was meant to prevent and discourage the fraudulent activities which normally prevailed in the asset structuring and restructuring activities.
Need of asset restructuring
Usually people borrow the money from banks on the purchase of any immovable property. Different banks lend them money and this sometimes may cause harm to them in terms of fiscal debts. Therefore the asset restructuring was introduced in order to check these frauds and repair in case of any fiscal loss.Furthermore the frauds of multiple lending could also be checked by means of the asset restructuring system.
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