An Explorative Study on the Reorganization and Turnaround Strategies of Financial Distressed Companies in Taiwan
Date Issued
2005
Date
2005
Author(s)
Chu, Yao-Nong
DOI
zh-TW
Abstract
In the past two decades, domestic economy in Taiwan has changed rapidly due to cascades of changes of global economy. Accordingly, the appealing cases for corporate reorganization or bankruptcy due to insolvency were increasing tremendously. Unless a successful turnaround results comes out, corporate reorganization or bankruptcy eventually will not only create social instability due to a large-scale of layoff or downsizing, but also negatively affect local economy as a whole. However, many evidences show that many companies who appeal for reorganization simply try to prevent the creditors from exercising their claims, but are not working toward the goal of restoring the company value. In addition, although the newly revised corporate law offers a legal framework for corporate reorganization, it is not thorough enough to drive those financially distressed companies to pursue a successful turnaround.
The present research is motivated by this concern and attempts to unravel the critical successful factors of turnaround cases after reorganization appeals by undertaking a qualitative research approach. To achieve this research goal, we choose two turnaround cases almost occurred at the same time period in Taiwan. One case is ended up with a successful turnaround while the other one is still in struggling and expected to be a failure case. By comparing case with contrasting results, we are able to draw common factors leading to differential results and hence postulate a set of successful turnaround strategy.
This study found that the major shareholder’s commitment to restoring the financial viability of the financially distressed company, not simply avoiding the creditor’s claiming, is essential its turnaround results. Given their commitment, a bona fide personality of the execution team for turnaround is critical to achieving a success. We suggest goals pertaining to short-, mid-, and final-term of the corporate reorganization processes, which are (1) stabilizing the operations, (2) cleaning up assets and debts, and (3) rebuilding the operations respectively, and should be closely followed based on the legal guidance to ensure satisfactory results.
Subjects
再生策略
財務困難公司
重整
Turnaround Strategies
Reorganization
Financial Distressed Company
Type
thesis
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