Financial Restructuring of a Company in Dubai

Updated on Friday 23rd June 2017

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Dubai is one of the most attractive business locations where foreign investors choose to incorporate a company. The business environment is favorable to foreign investments, due to the local policies and incentives offered to foreign businessmen. However, sometimes, companies may be faced with the possibility of financial restructuring, a process which can be determined by various market situations or by company's internal factors. Financial restructuring can have a positive impact on the company, as it offers the possibility of reorganizing the operational structure and become financially efficient. Our accounting firm in Dubai can offer you assistance for creating a restructuring plan according to the company’s current situation and reassess the company’s financial position.

 

The importance of the financial restructuring in Dubai 


A business can be in need of financial restructuring when the company is no longer able to pay its debts. The process is enforced when a company is having financial issues that may affect the integrity of the business; financial restructuring is a process that can eliminate the risks incurred by the company and, if performed in a manner in which all the problems are identified, it can lead to a financial re-launch. The company restructuring is recommended when a business has a low level of sales or if the company is underleveraged or overleveraged; if you are encountering a financial problem which can compromise your company’s financial results, our accountants in Dubai can offer you an adequate help, tailored to the needs of the business. You may also rely on our auditing firms in Dubai for services in this matter.
 

Overleveraged company in Dubai 


An overleveraged company is one which has overborrowed debt on a regular basis; such a situation may be encountered when companies decide to start ample development projects, such as buying a new plant. Financial restructuring in the case of an overleveraged company can be done through several methods, such as: 

•    selling unprofitable assets in order to pay a part of the debts;
•    rent company’s equipment;
•    refinance the current debt at a lower interest rate;
•    issue new stocks.
 

Underleveraged company in Dubai 


A company can become underleveraged when the capital of the company was raised through stocks; if that certain company has to pay dividends, a part of the profits will have to be allocated to the company’s shareholders. In this case, financial restructuring can be implemented through the following: 

•    buying back stocks;
•    borrowing funds;
•    selling assets to buy stocks. 

For a better understanding of the financial restructuring procedure in Dubai, we invite you to watch the video below:




If you need further information on the corporate financial restructuring, please contact our accounting firm in Dubai

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