Corporate Reorganization Research Articles

Changing times: incentive regulation, corporate reorganizations, and productivity growth in the Great Britain’s gas networks

ABSTRACT The gas industry in Great Britain has witnessed periodic regulatory reviews and large corporate reorganization over the last few decades. We assess how these changes have impacted total factor productivity growth using a data envelopment analysis (DEA) approach by setting out different models, each for gas transmission and distribution network. We also construct a combined single series for distribution and transmission using financial data to show whether productivity growth can be attributed to corporate reorganizations. Our results show a negative productivity growth of −1.6% p.a. for gas transmission over the sample period, but reversed to a positive TFP growth once quality is included. For gas distribution, we find productivity regress at −6.2% p.a. over the sample period, with a negative productivity trend observed across all the models, despite the inclusion of quality variables. However, the findings reveal a slightly higher productivity growth of 1% p.a. using corporate data, with pre-restructuring period having a positive productivity growth compared with the post-restructuring era with a negative productivity growth.

Corporate Reorganization and the Reallocation of Labor in Bankruptcy

Corporate Reorganization and the Reallocation of Labor in Bankruptcy

Meeting the Looming December 31, 2024 Deadline for Corporate Reorganizations of Sino-Foreign Joint Ventures Under China's 2020 Foreign Investment Law

Meeting the Looming December 31, 2024 Deadline for Corporate Reorganizations of Sino-Foreign Joint Ventures Under China's 2020 Foreign Investment Law

기업회생을 위한 협상에서 협상전략과 협상성과 간의 관계와 협상태도의 조절효과

기업회생을 위한 협상에서 협상전략과 협상성과 간의 관계와 협상태도의 조절효과

The Relationship between Operational Synergy and Firm Performance: A Review of Literature

Theoretical and empirical evidence has documented erratic and fluctuating firm performance amongst financial firms worldwide and across different economic sectors. The need to stabilize firm performance has instigated a variety of corporate reorganization strategies including Mergers and Acquisitions. However, theoretical and empirical literature has not been quite categorical on the link between operational synergies (arising from Mergers and Acquisitions) and firm performance. Firms have increasingly inclined towards operational synergy to enhance firm performance. Operational synergy has consistently improved firm performance outcomes in most firms. However, while numerous studies have examined the relationship between operational synergy and performance, there exists a need to synthesize and consolidate the findings across diverse contexts and economic sectors. Hence, the purpose of this review was to determine the relationship between operational synergy and firm performance via desktop review. The study was informed by three theories; The Theory of Misvaluation, The Hubris Theory and Stakeholder Theory. The review adopted a positivist research philosophy and desktop review design via evidence-based approach. The Study Documents that operational synergy has a significant effect on firm performance. Additionally, the review finds that firms which actively pursue operational synergy strategies exhibit improved financial performance, cost reduction, streamlined processes, and higher customer satisfaction. The study further finds that firms which successfully achieve operational synergy, particularly through mergers and acquisitions, have a tendency to outperform their competitors financially, with improved profitability, cost efficiency, and overall financial performance. Hence, the study recommends that firms should prioritize the development and implementation of strategies that foster operational synergy such as promoting a culture of collaboration, communication, and integration across different operational functions. Keywords: Operational synergy, Organizational effectiveness, Integration, Efficiency, Review of literature, Performance

Corporate Restructuring at One of The Energy Companies in Indonesia: Does it Have an Impact?

In 2021, one of Indonesia's state-owned enterprises (SOEs) in the energy sector, which is one of Indonesia's Fortune Global 500 companies, restructured and divided itself into six sub-holdings with distinct business segments. The company's corporate restructuring mechanism is financial and portfolio restructuring. Large corporations in Indonesia rarely engage in these corporate actions. Consequently, it is intriguing that this research examines the impacts of corporate restructuring. This study seeks to investigate the restructuring’s motives and the impacts of corporate reorganization on a company's performance, as well as its effect on the company's external environment. The authors utilized a qualitative approach with an explanatory case study to accomplish the research objectives. Individual depth interviews (IDI) are used to acquire data from multiple informants who represent shareholders, internal holding companies, and sub holding companies. This study provides an alternative assessment of the impacts of corporate reorganization so that both the company and the government can formulate future decision-making strategies. Most of the prior research on corporate restructuring employed an empirical quantitative technique approach, which involved analyzing data from a variety of companies and industries, so the results of the prior study lack comprehensive information.

Reconstructing the Debt Restructuring Mechanism in the Indonesian Law on Bankruptcy and Suspension of Debt Payment Obligations

The purpose of the Suspension of Debt Payment Obligations (SDPO) is to prevent a debtor who is in trouble for whatever reason, lacks money, or finds it difficult to obtain credit, from being declared bankrupt. The current Indonesian Bankruptcy Law lacks a debt restructuring mechanism. There need to be improvements to ensure quality, transparency of objectivity and implementation mechanisms, honesty and legal certainty. This study aims to reconstruct the debt restructuring mechanism through the SDPO in the Indonesian Bankruptcy Law to provide legal certainty and benefit for all parties. This research has an Indonesian national scope. This is normative legal research that applies the statute and comparative approaches. Results show that Law Number 37 of 2004 still does not provide a legal framework for an effective corporate reorganization or debt restructuring. This law should be a system created to prepare agreements between creditors and debtors to negotiate based on an analysis of future events. Debtors often fail to postpone their obligation to pay debts not because the debtor did not submit a reconciliation plan, but because an agreement was not reached in the reconciliation process. As Law Number 37 of 2004 does not regulate the form of debt restructuring and company reorganization (including the payment process, payment period, and interest rate reduction) to save the debtor’s company, it is still difficult for the debtor’s company to pay off its debts.

The unfortunate dearth of judicial precedent in transfer pricing continues

Despite what could be hailed as the first two transfer pricing cases in South Africa, the unfortunate dearth of judicial precedent in South Africa regrettably continues. Transfer pricing is one of the most complex areas of tax alongside provisions dealing with controlled foreign companies, foreign exchange gains and losses, currency conversions, financial instruments, and corporate reorganisations. In fact, as the list goes on, it is just more apposite to say ‘tax is complex’, period. With regard to transfer pricing in particular, the complexity is amplified by the fact that transfer pricing is not even tax per se. It is an economic allocation of contribution through the value chain. It is through transfer pricing that each contributor in the value chain gets an adequate return for their contribution in the value chain. Once that allocation is complete, the tax provisions are applied to the returns of each contributor according to the tax laws of the countries in which they are taxable. A transfer price is a price set by a taxpayer when selling to, buying from or sharing resources with a related person. A transfer price is contrasted with a market price, which is the price set in the marketplace for the transfer of goods and services between unrelated persons where each party strives to get the utmost possible benefit from the transaction (see Arnold & McIntyre, International Tax Primer (Kluwer Law International 2002) 55; Danzinger, International Income Tax (Butterworths 1991) 303–307). Transfer prices are not negotiated in a free open market and as such have the propensity to deviate from prices agreed upon by non-related trading partners in comparable transactions under the same circumstances (Oguttu, International Tax Law: Offshore Tax Avoidance in South Africa (Juta 2015) 213). Unless prevented from doing so, related persons engaged in cross-border transactions can avoid the income taxes of a country through a manipulation of prices, mainly by shifting profits to low tax countries and expenses to high tax countries. To combat this, tax authorities across the globe have the power to adjust, in appropriate cases, the transfer prices set by related persons (Arnold & McIntyre, (Kluwer 2002) 55. In what can be welcomed as the first transfer pricing case in the South African courts, the South Johannesburg High Court had an opportunity to decide on the applicability of s 31(7) of the Income Tax Act 58 of 1962 (‘the Act’; any reference to a section or subsection are to the Act, unless otherwise stated, or the context indicates otherwise) to a debt owed by a foreign company to a South African company. The applicable provision excludes debt instruments that contain core characteristics of debt instruments from the application of transfer pricing provisions. In the second case, the same court missed out on an opportunity to gauge the legitimacy of the revenue collector to use s 31(2) of the Act to adjust prices charged between a taxpayer and third parties that are not related to the taxpayer.

Corporate reorganisation option in Fiji: shareholder theory perspective

Corporate reorganisation option in Fiji: shareholder theory perspective

Corporate reorganisation option in Fiji: shareholder theory perspective

Corporate reorganisation option in Fiji: shareholder theory perspective

The economics of prepackaged bankruptcy

The economics of prepackaged bankruptcy

Corporate Reorganisation Law and the Shaping Powers of Market Realities and Doctrinal Concepts

Abstract In Corporate Reorganization Law and Forces of Change, Sarah Paterson investigates the development of modern corporate reorganisation law in the United States and England and shows how, and why, the use of these laws has changed over time. Paterson argues that any analysis of corporate restructuring law must focus on the participants in the process and the way they mobilise and adapt legal rules in new ways to meet the problem of the day. She concludes that best practice, not doctrinal concepts, should inform any law reform in this area. This review concludes nonetheless with an attempt to identify a doctrinal concept of a modern restructuring law based on the insights of Paterson’s socio-legal analysis.

An invisible man, a double agent, and a five‐tool player: Three issues for the Chief Restructuring Officer in Korean corporate reorganization procedures

AbstractThe Chief Restructuring Officer (CRO) system in Korea was introduced in 2011 after the Debtor Reorganization Act adopted the Debtor‐in‐Possession (DIP) system in 2006. However, the introduction of the CRO system in Korea, which was based on the American system, was problematic due to the lack of legal grounds, the vagueness of its legal status, and the complexity of its roles. This article explores the emerging issues related to the status and roles of a CRO in the Korean corporate‐reorganization procedure. Three major issues are analyzed: lack of legal ground and its codification (“Invisible Man”), the dual legal status of being a debtor's adviser and creditors' protector (“Double Agent”), and the expansion of the CRO's roles (“Five‐Tool Players”). This research also sketches the legal landscape of corporate reorganization practice in Korea. It provides some possible suggestions to foster the chances for debtor rehabilitation through improved operation of the CRO system.

Bankruptcy voting process and corporate reorganization

AbstractThis study investigates the main legal determinants of corporate reorganization use. Three legal aspects of bankruptcy voting process were examined, such as the voting right of secured creditors (1), bankruptcy voting rule (2), and court's legal right to overrule creditors’ decision (3). Using a sample of 20 countries, our estimations confirm that granting a voting right to secured lenders tends to be associated with more corporate reorganizations. Secured creditors’ voting right may send a signal about firm's capacity to recover from financial distress. Such signal can encourage unsecured creditors to support the reorganization plan.

Applying Fiscal Tools for Economic Development and Localization of CO VID‑ 19 Impacts on a Case Study of South America

The tax system of any country as a tool to fill the budget is never static, constantly subject to development and improvement, so it is relevant to study and apply its progressive elements used by different states. The subject of the study is the current tax transformation in Brazil, Argentina, Colombia, and its task is to study and apply its results, since the pandemic particularly affected the economies of developing countries. Countries of South America have been actively pursuing tax reforms since the middle of the last century, but localizing the effects of COVID‑19 requires tax changes in this area at the present time. The tax transformation in Brazil has involved a tax on dividends, capitalization of accumulated profits and dividends paid in kind, corporate income tax and corporate reorganizations. The tax transformation in Argentina also takes place in terms of income tax (restrictions on depreciation payments, permanent establishment), but there are also areas, such as tax haven policy, capital gains tax on non-residents of Argentina, and taxation of controlled foreign companies. The author carried the research on using general scientific methods of analysis, comparison, and deduction. The results of the study of tax transformation in South American countries can, considering the specifics of our economy, find practical implementation in the tax’s improvement system in the Russian Federation. Thus, it is proposed to adapt the following tax instruments in order to localize the effects of COVID‑19: tax loss carryforwards, deduction of R&D expenses.

Sarah Paterson, Corporate Reorganization Law and Forces of Change

Sarah Paterson, <i>Corporate Reorganization Law and Forces of Change</i>

S.Paterson, Corporate Reorganization Law and Forces of Change, Oxford University Press, 2020, 320 pp, hb £80.00

S.Paterson, Corporate Reorganization Law and Forces of Change, Oxford University Press, 2020, 320 pp, hb £80.00

Firm Heterogeneities, Multi-Dimensional Proximities, and Systematic Dynamics of M&amp;A Partnering: Evidences from Transitional China

Corporate investment strategies and decision-making processes are crucial for understanding the operation and evolution of socioeconomic systems. Mergers and acquisitions (M&amp;As) have been the main mode of corporate investment, growth, and upgrading, deeply affecting corporate reorganization, regional industrial restructuring, and economic globalization. By building a database including 5543 M&amp;A partnerings and 1.89 million M&amp;A non-partnerings, this study aims to uncover the systematic dynamics of M&amp;A partnering in regional China during different phases since the mid-1990s, with particular attention given to the effects of firm heterogeneities and multi-dimensional proximities. Although geographical, cognitive, organizational, and institutional proximity dimensions are significantly influential for M&amp;A partnering, we find that the effects of multi-dimensional proximities differ across M&amp;A types and involving firms. Specifically, organizational proximity matters more for large- and medium-sized acquirers, while institutional proximity plays a more vital role in the acquisition target selection of private-owned and small-sized acquirers. Cognitive proximity measured by industrial and technical relatedness is more crucial for horizontal, vertical, and conglomerate M&amp;As that are tightly associated with the corporate product, technical, and functional upgrading. The results indicate that the benefits of cognitive proximity may offset the risks and costs resulting from long-distance M&amp;As, demonstrating the interactive dynamics between proximity dimensions. Our findings suggest that firm heterogeneities, proximity dynamics, and contextual factors should be focused on when explaining the investment decision-making processes of individual corporations in emerging and transitional economies such as China.

Section 29A of India’s Insolvency and Bankruptcy Code: an instance of hard cases making bad law?

ABSTRACT The Insolvency and Bankruptcy Code (IBC) of India which offers a mode of reorganisation for distressed corporations prevents promoters and directors with non-performing assets from submitting plans to rescue their company. This provision is contained under section 29A of the IBC. Judicial interpretation has required corporate reorganisations under India's Companies Act to give effect to the limitations under section 29A as well. The introduction and application of section 29A is reflective of a broader scepticism towards allowing promoters and directors whose companies entered financial distress from regaining control. This article evaluates whether section 29A has addressed the problems it had set out to and finds that some ineligibilities prescribed for the incumbent management under section 29A can be relaxed. It also uses the example of the United Kingdom's insolvency regime (with which India bears similarities) to explain why resolution plans from the incumbent management should not be disallowed.

Changing Times: Incentive Regulation, Corporate Reorganisations, and Productivity Growth in the Great Britain's Gas Networks

Changing Times: Incentive Regulation, Corporate Reorganisations, and Productivity Growth in the Great Britain's Gas Networks