Cooperative Bank A Case of Corporate Restructuring Essay

Cooperative Bank A Case of Corporate Restructuring - Essay Example The paper tells that troubles that may threaten the very existence of an organization can affect all types of organizations, irrespective of size, brand name or type of industry. Some companies that experience extreme difficulties usually seek to apply for insolvency. A larger percentage of companies in the world at the moment are facing strategic issues, liquidity issues and outcome issues. Before an organization applies for insolvency, it usually passes through the three crisis stages. The first is the strategy crisis in which the company is unable to meet its strategic goals or attain long-term success potential. The second stage is the decline of the company’s market share in its respective index. Finally, if the company fails to implement the required corrective actions, its profitability goals will not be met and the company sinks into an earning crisis. In an impending disaster is identified in a timely manner, corrective actions can be undertaken to ensure the company stays afloat. Corporate restricting can also take place due to a change in the ownership structure, demerger or a reaction to company troubles or major business changes such as a buyout. The main purpose of restructuring management is to ensure that a given company under crisis survives in the short term and to reclaim the company’s competitiveness. Corporate restructuring, mainly relies on the zero-sum game. The process of restructuring decreases financial losses and in the process lowering tensions between debt and equity holders in order to jump start a fast resolution of a troubled situation.