Financial Restructuring of a Company in Dubai

Updated on Friday 14th September 2018

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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 the 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 making it 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 has 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 methods: 

•    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:


 

Reasons why a company needs to be restructured

 
Even if Dubai offers a solid business environment, there are cases in which the entrepreneurs can no longer associate with the company’s needs and directions. A restructuring procedure may intervene if the following issues are detected:
 
there is not enough liquidity or there are too many debts which cannot be covered;
the form of business needs to be reconsidered, if necessary;
the objectives of the firm have not been accomplished;
the financial balance between expenses and profits is not proportionate.
 
When such problems are detected in a company in Dubai, it is best to talk to financial advisors and then create a plan that eliminates the risk of bankruptcy or liquidation. A new financial planning and complete tax advice can be offered on request by our team of accountants in Dubai.
 

Top recommendations in a financial restructuring in Dubai
 

Certainly, the owners or the shareholders of a company in Dubai are entitled to take the decision of a financial restructuring, considering the legal support of the attorneys or financial supervisors. The following aspects are strongly related to the ways in which a business, whether large or small, should be financially restructured:
 
analyze the conditions with the providers (costs, materials);
evaluate the business configuration and consider adopting a new strategy;
considering the tax minimization methods and the ways in which they can be adopted;
review and organize the financial planning and then consider dealing with future investors.
 

Company reorganization as a solution for your business


A financial restructuring might observe another situation like reorganizing the company that might be the proper solution instead of filing for bankruptcy. In this direction, business persons can decide on changing the internal structure or adopting other activities. The board of managers can be replaced if it proved underperformant. Also, you might want to reconsider the marketing policies for future effectiveness in the firm. In the same company reorganization process, employees evaluation is in most cases a hard choice but prolific if you would like to eliminate the rate of instability or non-performant departments.
 

Business restructuring services in Dubai


A company restructuring comes with a series of plans and projects that can be introduced for better performances of the business. For instance, business and operations reviews that cover all areas can be the solution for a company restructuring. Also, it is suggested to put in balance the pros and cons related to the ways the company was controlled so far, and if it is the case, punctual measures can be adopted, like changing the staff in a particular department or replacing employees if it is necessary.
 

If you need further information on the corporate financial restructuring or if you are interested in accounting services for your business, please contact our accounting firm in Dubai