Restructuring is often spoken about as if it only applies to companies in financial distress. In reality, that is too narrow. In a corporate context, restructuring can be an exercise designed to simplify a group, separate business divisions, move assets into new entities, ringfence risk, prepare for investment or sale, or respond to changing trading conditions.
That remains particularly relevant in the current market. The Insolvency Service reported 1,744 registered company insolvencies in England and Wales in January 2026, including 151 administrations and 13 Company Voluntary Arrangements (CVAs). While insolvency and restructuring are not the same thing, the figures are a reminder that businesses should not wait for pressure to become critical before reviewing their structure and options.
Restructuring is Broader than Insolvency
Many restructurings are solvent and commercially driven. A company may want to separate part of its business into a new subsidiary, simplify an inherited group structure, prepare a division for sale, or align ownership more closely with how the business is actually run. In those situations, restructuring is not about business failure. It is about creating a structure that is easier to manage, fund and grow.
That said, even a solvent restructuring requires careful execution. A plan that works commercially will only succeed if it also works legally and practically. That is where corporate input becomes important.
Common Restructuring Routes
The right route depends on the company’s objective.
An asset transfer may be suitable where a business wants to move a trading division or selected assets into a new vehicle. That can be useful for internal reorganisation, succession planning, investment readiness or a future disposal.
In other cases, a wider group reorganisation or demerger may be more appropriate, particularly where different shareholders or business lines need to be separated into standalone structures.
Where a company is under financial pressure but still has a prospect of rescue, more formal tools may need to be considered, including a scheme of arrangement, restructuring plan or moratorium. If the business has reached a more serious stage, administration, a CVA or liquidation may become part of the discussion.
The key point is that restructuring is not one single process. It is a range of legal and commercial tools, and the correct one depends on the company’s circumstances and timing.
Key Issues
In practice, restructuring projects are often won or lost on a small number of recurring issues.
1. Can the assets actually be transferred?
A proposed structure may look straightforward on a chart, but the real question is whether the underlying assets and rights can move as intended. Property will usually need separate transfer mechanics. Contracts may contain anti-assignment wording or change of control clauses. Intellectual property may need formal assignments. Insurance arrangements may need to be replaced rather than simply moved.
This is why restructuring work rarely sits with corporate documents alone. It often requires joined-up input from property, banking, employment and tax teams as well.
2. Are employees affected?
If a business or part of a business is moving from one company to another, Transfer of Undertakings (Protection of Employment) regulations (TUPE) must be considered at an early stage. Under the government’s guidance, employees may transfer with their existing rights and continuity of employment preserved. There are also information and consultation obligations, and employee liability information generally needs to be provided to the incoming employer at least four weeks before the transfer.
That means employment issues cannot be left until the end of the transaction. They need to be factored into the structure and timetable from the outset.
3. Are the directors comfortable with the solvency position?
Some restructuring steps depend on a clear solvency analysis. A good example is a reduction of capital by solvency statement. Under section 641 of the Companies Act 2006, a private company limited by shares may reduce its share capital by special resolution supported by a solvency statement. The legislation and explanatory notes make clear that directors must have reasonable grounds for the opinion they give, and that they must take account of liabilities, including contingent and prospective liabilities.
That means reliable financial information matters just as much as the drafting. Directors need proper balance sheet visibility, cashflow forecasting and a realistic picture of contingent exposures before signing off the relevant steps.
4. Have third-party consents been identified early enough?
In many restructurings, the legal documents are not the real obstacle. The obstacle is consent. Assets may be charged to lenders. Finance documents may restrict disposals or intra-group transfers. Leased equipment may not be transferable without approval. Key customer or supplier contracts may require assignment or novation consent.
As a result, the critical path is often not board minutes or resolutions. It is identifying what permissions are needed and obtaining them in time.
5. Is the tax analysis aligned with the legal steps?
Tax should never be treated as an afterthought in a restructuring. The order of steps, the route chosen and the nature of the assets being moved may all affect whether the intended structure works as planned. A commercially sensible outcome can still fail if the legal implementation does not match the tax assumptions underpinning it.
For that reason, restructuring works best where corporate, tax and finance advisers are working to the same implementation plan rather than approaching the exercise in isolation.
Why early action matters
One of the clearest themes in restructuring work is that businesses usually have more options when they act early. Early advice gives time to identify title issues, review contracts, assess employee implications, map out consents, test solvency and build a realistic completion plan.
By contrast, once cashflow pressure, creditor action or internal shareholder disputes become acute, the company’s room for manoeuvre narrows and the legal execution becomes more difficult.
Final Thoughts
Restructuring in England and Wales is not limited to formal insolvency. It includes a wide range of strategic and solvent reorganisations designed to give companies greater flexibility, clearer ownership structures and a better platform for future growth, investment or recovery.
The value lies in identifying the issues early and ensuring that what makes sense commercially can also be delivered legally and practically. In most cases, the earlier a company takes advice, the more options it is likely to preserve.