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Financial reconstruction Business reorganisation Types of change - Financial reconstruction schemes • Balogun and Hope Hailey analyse types of change into its scope and nature as follows: Scope of change (does it a r the basic business model – the paradigm?) Speed of change (how Realignment (doesn’t Transformation fast does it change the paradigm) (changes need to the paradigm) happen?) Incremental Adaptation Evolution (step-by- – step by step in the – paradigm changes step) current way of over time, as a thinking. Most result of analysis change is in this and planned actions category or emergent change Financial reconstruction schemes Financial reconstruction schemes Restructuring a pany is corporate surgery to enable a pany to continue in business. It will usually involve a radical change in the capital structure of a pany. Why restructure? If a pany is facing a high interest burden or severe cash flow problems in the short-term, a promise deal will be sought whereby the bondholders will be offered new debt and/or equity in exchange for their existing debt. The sha olders are likely to see a large dilution of their holding. Legal framework The deal must be agreed by all parties – classes of creditors should meet separately so that substantial minorities are not voted down. Every class must vote in f our for the scheme to succeed. Approach to reconstructions a) Est te the position of each party if liquidation were to go ahead. This will repre