In an increasingly volatile and competitive economic landscape, a company's ability to adapt and overcome crises has become a key differentiator for its survival and longevity. Business restructuring, whether financial, operational, or strategic, emerges as an inevitable path for many organizations facing difficulties. However, the success of this complex and multifaceted process depends not only on cost-cutting or debt renegotiation. A solid foundation upon which recovery can be built is fundamental, and that foundation is, unequivocally, corporate governance.
Historically, corporate governance was seen by many as a set of bureaucratic formalities, an additional cost, or a mere regulatory requirement. This perception, however, is profoundly mistaken, especially when the company finds itself at a crossroads. Governance is, in fact, the system that directs and controls an organization, involving the relationships between management, the board of directors, shareholders, and other stakeholders. Its fundamental principles – transparency, fairness, accountability, and corporate responsibility – are the same ones that guarantee the credibility and effectiveness of a restructuring plan.
The first pillar is transparency in restructuring. A company in crisis deals with the distrust of creditors, investors, suppliers, and even its own employees. The dissemination of clear, accurate, and timely information about the true financial situation is beneficial, provided it is done strategically, and is the first step in rebuilding trust. Without the trust of stakeholders, any negotiation becomes more difficult, and the chances of obtaining the necessary support for the approval of an orderly restructuring decrease drastically.
Linked to transparency is... Internal Accountability. Managers and administrators must adjust their decisions based on the results achieved, modifying them when necessary. In a restructuring context, this means having strong and committed leadership, capable of making difficult, often unpopular, but necessary decisions for the company's future. An active and independent board of directors is vital to oversee management, evaluate performance, and ensure that the interests of all parties are considered, preventing decisions from being made based on personal interests or those of specific groups.
Equity is another indispensable pillar. A restructuring procedure affects a wide range of stakeholders with sometimes conflicting interests. Shareholders, creditors of different kinds, employees, and suppliers need to be treated in a balanced way and in the best interest of preserving the company. Corporate governance must verify the mechanisms to ensure this equity, guaranteeing that the sacrifices and benefits of the restructuring are distributed proportionally and fairly, which is the very essence of a successful restructuring.
Finally, Corporate Responsibility completes the foundation of governance. This goes beyond compliance with laws and regulations. It is about a commitment to the long-term sustainability of the business, considering the social, environmental, and economic impacts of its operations. A successful restructuring is not just one that saves the company from bankruptcy, but one that repositions it in the market as a viable, ethical, and sustainable organization, capable of consistently generating value for society.
In practice, implementing robust governance during a crisis can manifest itself in several ways: creating a restructuring committee with independent members, hiring specialized and impartial advisors, improving internal controls and risk management, and establishing direct and transparent communication channels with all stakeholders. These measures not only increase the chances of successful restructuring but also enhance the company's value, making it more attractive for new investments and strategic partnerships.
Practical experience demonstrates that companies that possess or quickly adopt good governance practices at the first sign of crisis are the ones that navigate the restructuring process with greater agility and effectiveness. Governance ceases to be mere rhetoric and becomes a practical management tool, guiding decisions, aligning interests, and, above all, building the future on solid foundations.
One particularly relevant aspect is the relationship between corporate governance and judicial reorganization. The Bankruptcy and Corporate Reorganization Law (Law No. 11.101/2005) implicitly recognizes the importance of proper management during the reorganization process. Companies that demonstrate commitment to principles of transparency and accountability receive greater support from creditors and have a higher chance of having their reorganization plans approved. Conversely, a lack of adequate governance is often a contributing factor to the failure of restructuring plans.
Another key point is proper communication with different stakeholder groups. Creditors, suppliers, employees, and potential investors need to clearly understand the restructuring strategy, the risks involved, and the prospects for return or recovery.
Corporate governance also plays a key role in attracting capital during restructuring. Investors and creditors considering investing in a company in crisis carefully assess the quality of its management and governance practices. A company that demonstrates robust internal controls, competent and committed leadership, and transparency in its operations is far more attractive from an investment perspective than one that lacks these characteristics.
Therefore, corporate governance should not be seen as a remedy to be applied only in times of crisis, but as a vaccine that strengthens the company's organism, making it more resilient and prepared for challenges. In a restructuring process, it transcends its traditional role and rises to the status of a strategic pillar, being the main catalyst for a recovery that is not only successful, but truly sustainable.
In short, successful business restructuring requires much more than accounting or operational adjustments. It demands a profound transformation in how the company is governed, managed, and controlled. Adopting sound corporate governance principles – transparency, accountability, fairness, and responsibility – is not a luxury or a formality, but a strategic necessity that largely determines the success or failure of any restructuring process. Companies that understand this truth and act accordingly will be better positioned not only to survive the crisis but to emerge from it as stronger, more reliable, and more future-proof organizations.
Article prepared by Vitor Antony Ferrari, partner in the Financial Restructuring area.