What is the difference between Restructuring and Reorganization? - ProProfs Discuss
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What is the difference between Restructuring and Reorganization?

Asked by C. Gray, Last updated: Oct 05, 2021

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Barry Mclean

Barry Mclean

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Barry Mclean
Barry Mclean, Sales Manager, MBA, Ewa

Answered Oct 08, 2020

From the name itself you can already guess that when you say restructuring, this means that you are changing the structure of the organization. When you say reorganization, this means that you are rearranging some of the aspects of the organization which you think will work better.

Restructuring is sometimes considered to be a drastic change especially if the structure is going to be very different from what you are used to. When you say reorganization, this normally means that the changes that you are going to do are internal. This may be done in order to cut costs and generally make the whole company more productive.

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H. Martin

H. Martin

H. Martin
H. Martin, Content Writer, Charlotte

Answered May 20, 2020

The process of restructuring is based on the critical decision of whether to transpose the company or save it by either selling shares of the company to the investors, decreasing services, or taking care of financial debts. Either company hires financial and legal advisors or a new CEO (Chief Executive Officer) to come to a decision. Reorganization means taking control of a bankrupt or financially unstable firm.

It involves negotiations with creditors concerning the financial debt is minimized. Reorganization can also speak to the sale or union of a company that entails an abrupt change in stock. It is a court-supervised formal progression that restructures a company’s finances after it faces bankruptcy or liquidation.

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