what is a reorganization 
a reorganization is a significant and disruptive overhaul of a troubled business intended to restore it to profitability it may include shutting down or selling divisions replacing management cutting budgets and laying off workers a supervised reorganization is the focus of the chapter 11 bankruptcy process during which a company is required to submit a plan for how it hopes to recover and repay some if not all of its obligations understanding reorganizationthe function of a bankruptcy court is to give an insolvent company the chance to submit a reorganization plan if approved the company can continue to operate and postpone paying its most pressing debts until a later date to get the approval of a bankruptcy judge the reorganization plan must include drastic steps to reduce costs and increase revenue if the plan is rejected or is approved but does not succeed the company is forced into liquidation its assets will be sold and distributed to its creditors a reorganization requires a restatement of the company s assets and liabilities as well as negotiations with major creditors to set schedules for repayment reorganization can include a change in the structure or ownership of a company through a merger or consolidation spinoff acquisition transfer recapitalization a change in name or a change in management this part of a reorganization is known as restructuring a reorganization to stave off bankruptcy may have a favorable outcome for shareholders a reorganization in bankruptcy is usually bad news for shareholders not all reorganizations are overseen by a bankruptcy court the management of an unprofitable company may impose a drastic series of budget cuts staff layoffs management ousters and product line revisions with the aim of restoring the health of the company in such cases the company is not yet in bankruptcy and is hoping to stave it off this is sometimes called a structural reorganization 