business reorganization plan

5 steps to include in the company reorganization process

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Company reorganization often includes a change in the organizational or financial structure of a business. This is normally done through a merger, rebranding, acquisition, recapitalization, or change in leadership. This part of the reorganization process is referred to as restructuring. Planning and communication is key to a successful company reorganization.

That's why a company reorganization process must be undertaken with sensitivity, strategy, and foresight. If you’re shaking up an entire company, the key to success is planning and communication. 

What is company restructuring?

Company restructuring is a corporate management term that broadly refers to a company doing one of the following:

• Changing its organizational structure, which can involve shifting direct reports to a different manager, reallocating resources to other parts of the business, etc.
• Changing its financial structure, which can involve selling assets, refinancing debt at lower interest rates, or even filing for bankruptcy

For the purposes of this article, we'll focus on organizational restructuring.

Why do companies reorganize?

There are many reasons for org restructure. The primary reasons for restructuring can include:

• Something is broken. If your organization isn’t meeting its KPIs, if your processes or employees have become inefficient, or if there are essential tasks that aren’t covered by any position, it may be time to consider a company restructure.
• Your company has merged with or acquired another organization.
• An employee in a key position has left, which leaves an opportunity to question the organizational structure.
• You want to make way for a new opportunity, such as launching a new product or capturing a new market.
• The needs of your customer base have changed.
• The organization has grown or is downsizing.
• Managers have too many direct reports.

Occasionally, companies choose to just undergo a department restructure, which means only a specific department will go through the restructuring process.

When that happens, the company has identified problems or inefficiencies within just one department, but because a company is heavily interconnected, what affects one department often affects other departments. So while it’s certainly easier to reorganize a department, it’s not uncommon for a company to overhaul its entire company structure at once.

Not sure whether your own company needs to consisder an org restructure? Find out with these 8 signs.

Include these 5 steps in the company reorganization process

1. Start with your business strategy 2. Identify strengths and weaknesses in the current organizational structure 3. Consider your options and design a new structure  4. Communicate the reorganization plan 5. Launch your company restructure and adjust as necessary  

How to restructure a company or department

No matter your reasons for changing your org structure, consider adding these steps to your company reorganization planning process.

1. Start with your business strategy

The first component of company reorganization strategy is finding out why upper management wants to reorganize in the first place. Without understanding the new direction the company’s heading or defining the problem the company is hoping to solve, there is nothing to guide the restructuring process and no way to measure its success.

The business strategy will arm you with the goals or criteria you’ll need to meet with this company reorganization plan—if such a plan is even practical.

If your company hasn’t solidified its business strategy yet, take a step back and go through the strategic planning process  first.

2. Identify strengths and weaknesses in the current organizational structure

With the strategy in mind, you need to consider where your current organizational structure is failing to meet company goals and where it’s working. If you haven’t already, create an org chart to gain an elevated perspective on where your company structure stands now.

Part of this org structure evaluation process should be to gather feedback. Too many companies undergo reorganization planning without taking into consideration the people who will be affected by both departmental and company restructuring plans. Your employees often have valuable insights on what isn’t working and what you should continue doing—it’s up to you to gather those insights and include them throughout your company restructure. 

It’s easier said than done, though. Without feeling that their concerns and ideas are taken seriously and are truly anonymous, your employees will be reluctant to divulge any feedback regarding a company restructure. It’s up to you to foster a safe environment in which employees feel their thoughts are valued. Consider sending out an anonymous survey to ask what they would change and how they would approach a company reorganization plan.

It’s also important to listen to key stakeholders in the reorganization planning process and to lean heavily on HR. If you’re in HR, don’t forget to communicate nuances to company restructuring that need special approval and consideration. Documents like union agreements, employment contracts, and work accommodations will all need input from appropriate parties. 

Make sure to weigh the advantages or profit of a potential restructure against the risk, which includes employees leaving due to organizational change. If the problem won’t be solved through restructure, don’t attempt the reorganization. It’s wasted effort—and a potential loss for your company.

Get your team's support. Learn how to get buy-in for changes to your organizational structure.

3. Consider your options and design a new structure 

After determining the problem with the current company organizational structure, gathering feedback from employees and key stakeholders, and considering all the existing job functions, it’s time to create a new organization model. 

Bear in mind that this newly restructured model is only a first draft—it should change before being implemented. This org restructure should include:

• The vertical and horizontal lines of authority
• An indication of who will be making formal decisions within departments
• Attributes of employees, including skills and experience
• The definition and distribution of functions throughout the organization and the relationships among those functions

Consider the pros and cons of different types of organizational structures : hierarchical, horizontal, matrix, etc.

As you’re working through options within your company reorganization process, the best way to see the layout and interdependencies of your new structure is to create an org chart . Lucidchart has a variety of restructuring plan templates available, and you can even import employee data from BambooHR, Google Sheets, Excel, or a CSV to create an org chart automatically.

Don’t attempt a company reorg without a visual to clarify your course of action to employees and keep all parties on the same page.

4. Communicate the reorganization

Once you’ve weighed various options in your reorganization planning and determined your best path forward, it’s time to announce the company restructuring plan.

Don’t spring the change on your employees. Make communication and transparency the highest priority throughout your company reorganization process—again, an org chart can help create clarity in this situation, especially paired with details about each role's responsibilities . You might need to communicate separately with managers or anyone with a direct report to ensure that they’ll be able to answer questions and help with execution.

At this point, your employees may provide feedback on the proposed company restructure. As an HR professional or a manager, this is the time to extol the amount of consideration that went into the reorganization plan and the benefits it will provide to everyone. Welcome questions—after all, carrying out a successful company reorganization process from start to finish takes the cooperation of everyone involved.

5. Launch your company restructure and adjust as necessary

The moment has finally arrived to execute the org restructure. Remember that change can be difficult—give employees some time to adjust to the restructuring process and accurately gauge its effects. Think back to your business strategy, and make adjustments if the new organizational structure still doesn’t meet your ultimate goals.

Need help getting employees to accept change? Consider these change management models  to help them prepare.

Start planning your company reorganization now

As a leader, your attitude about the company restructure strategy sets the tone for how it will be received by your employees and co-workers. If you’re excited about the restructuring, that excitement will be reflected in all involved throughout the reorganization process. If you’re somber, expect those affected to be suspicious and maybe even hostile. 

The bottom line is that company restructuring can be a fresh start for everyone; it can revitalize a company, reinvigorate employees, and allow for greater career growth. But planning and communication are key—start your company reorganization process early, get everyone involved, and stay organized to guide your company to a greater, more efficient organizational structure.

Reorganize your company and plan for the future in Lucidchart.

About Lucidchart

Lucidchart, a cloud-based intelligent diagramming application, is a core component of Lucid Software's Visual Collaboration Suite. This intuitive, cloud-based solution empowers teams to collaborate in real-time to build flowcharts, mockups, UML diagrams, customer journey maps, and more. Lucidchart propels teams forward to build the future faster. Lucid is proud to serve top businesses around the world, including customers such as Google, GE, and NBC Universal, and 99% of the Fortune 500. Lucid partners with industry leaders, including Google, Atlassian, and Microsoft. Since its founding, Lucid has received numerous awards for its products, business, and workplace culture. For more information, visit lucidchart.com.

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Home » Change Management » How to Create a Reorganization Plan in 4 Simple Steps

How to Create a Reorganization Plan in 4 Simple Steps

What is a reorganization plan and how are they structured?

In this post, we’ll explore the difference between a business reorganization plan and other related business change plans, such as organizational restructuring and business transformation. 

After that, we’ll examine a few tips and considerations to keep in mind when reorganizing your business.

Reorganization vs. Other Types of Organizational Change

In business, reorganization is often used interchangeably with terms such as restructuring, realignment, and reconfiguration. Though the terms are similar, there are technical distinctions.

For instance:

• Reorganization and restructuring emphasize organizational changes that affect the company’s underlying structural archetype
• Reconfiguration programs are smaller-scale reorganization efforts, such as combining or splitting business units, which do not fundamentally alter the company’s underlying structure
• Realignment efforts focus on realigning business activities that have become misaligned with external conditions, such as the marketplace or customer expectations
• Transformation refers to major organizations that change an organization from the ground up

While one type of organizational change may be the main focus of an initiative, it is important to understand that one type of change may result in other changes. 

In some cases, these additional changes will be part of the overall change plan. In others, they will come as a consequence of the original plan.

For instance, restructuring a business could easily affect the organizational culture , workflows, and business processes. When creating a plan, change managers may also choose to include other types of change plans, such as employee training programs and digital adoption programs.

The key takeaway: since reorganization plans will often have a ripple effect on other business areas, it is important to take those into account when creating a reorganization plan.

How to Create a Reorganization Plan

Here are a few steps and tips to help you design and execute a reorganization plan:

1. Understand the business impact

In the last section, we explained how important it is to understand the total impact that a change will have on the organization.

To gain that knowledge, use assessments before the actual planning stage. 

Useful assessments include:

• Change readiness assessments
• Gap analyses
• Cost-benefit analyses
• Technology acceptance model questionnaires
• Business impact analyses
• SWOT analyses
• Organizational culture assessments

Naturally, the type and number of assessments you use will be determined by the proposed change. Not all of those covered above will be necessary, and there may be other useful ones that aren’t in this list.

2. Design the strategy and plan

The strategy represents the overall approach to implementing the reorganization.

Articulating that strategy in a single, concise statement can help stakeholders understand the project’s direction, its approach, and its ultimate goal. Also, a well-crafted strategic statement can act as a “north star” that will guide planning efforts.

Plans, in turn, will combine the strategic approach with the information gathered in the first step. The result: a roadmap that will guide the reorganization process.

It can be useful to research models of change management , such as Prosci’s ADKAR model or the Kotter 8-step model. These models provide a general roadmap that can be applied in a variety of organizational change situations, as we’ll see in the next step.

3. Execute the plan

One important point to keep in mind when executing a plan is that certain aspects of the plan must be executed sequentially. For instance, employees cannot accept new job roles unless they understand what change is occurring and why.

The ADKAR framework, mentioned above, advocates a sequential plan that focuses on:

• Building awareness of the need for change
• Cultivating a desire for change
• Providing employees with the knowledge and skills they need to change
• Giving employees the ability to demonstrate their abilities
• Reinforcing change over time

The original version of John Kotter’s 8-step change model also followed a step-by-step roadmap. Its next version, however, which was released in 2014, included steps that could be executed concurrently.

In today’s business world, agile approaches such as this are becoming more common, since they often generate better business outcomes, greater organizational resilience, and improved workforce agility. 

4. Create a guiding coalition to lead the reorganization

As the saying goes, no battle plan survives first contact with the enemy – and the same can be said of any business initiative, including reorganization plans.

The importance of staying agile , as noted in the last step, can help change management teams respond more quickly to setbacks, accelerate the pace of change, increase employee engagement, and more.

One way to build agility into a business process or initiative – mentioned by Dr. Kotter, as well as other leading experts – is to create a cross-functional team that can operate outside of the existing business structure. 

Characteristics of this team should include:

• A willingness to adapt and stay agile
• A common sense of purpose
• Active support for the proposed change
• The willingness to recruit others
• The ability to self-organize and stay motivated

In the case of a reorganization plan, this committee would adopt the core responsibilities of the change effort. These could include all of the steps covered above, including assessing change readiness, redesigning the organization’s structure, collaborating with business leaders and stakeholders, and managing the change project.

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Corporate Reorganization: A Business Owner’s Guide

The current pandemic has thrown companies into chaos. As companies face new financial challenges and the growing risk of bankruptcy ; many are considering restructuring in an attempt to save their businesses and increase profitability. It’s no secret that for a business to thrive; it must be able to adapt to new situations and pivot when the situation requires it. However, reorganizing a company can be a complicated and overwhelming process that without proper planning, communication and strategy can go terribly wrong. Having a plan in place will not only help you anticipate risks and issues before they arise but is key to successful corporate reorganization.

Because restructuring and reorganizing a company is a serious undertaking that could have a significant impact on the performance of the business and bottom line; it requires proper consideration, planning, and foresight. It’s for this reason that if you are considering this major undertaking for your business, you should consider consulting with financial management experts with experience in dealing with these types of transitions.

Let’s break down some of the reasons why companies choose to restructure and how the reorganization process works.

What is Corporate Reorganization and Restructuring?

Before we delve into why businesses choose to restructure, it’s important to first understand what corporate reorganization actually means. Broadly speaking, the corporate reorganization process is an overhaul of a business in financial trouble with the objective of restoring profitability or improving efficiency. In most cases, a company undergoing reorganization aims to address efficiency issues as a means to improve profitability.

Corporate reorganization often takes place only after the business has tried (but failed) to increase the value of the company through other means such as acquiring venture capital.

While it can vary depending on the business and its key objectives, the reorganization process may include actions such as letting employees go and replacing higher level employees, shutting down or selling parts of the business, or cutting costs and lowering budgets. Generally, company restructuring can be done on the company level (i.e. reallocating resources to other parts of the business) or on the financial level (i.e. selling off assets or refinancing debt).

Why Do Companies Go Through Reorganization?

There are a number of reasons why a business might choose to reorganize their company depending on the issues they are facing. Below are just a few examples:

• If the business is not performing optimally or meeting its anticipated goals. For example, if the company or employees have become inefficient or important tasks have been falling through the cracks.
• If a top level employee has left the company leaving a vacuum; providing an opportunity to reevaluate the company on a whole. For example, a new CEO might have a different vision for the direction of the company or choose reorganization to fix some of the issues the business is facing.
• If you plan to acquire another company or are dealing with a potential merger.
• If consumer behavior or your customer’s needs have changed.
• If the company is facing or planning to declare bankruptcy.
• If any division or subsidiaries don’t comply with the company’s strategy, reorganization can help bring back focus to the companies long term vision.
• If there is a risk of economic loss due to an insufficient undertaking resulting in difficulty covering capital costs. For example, if market trends or changing consumer needs are putting the company in debt and hurting the company’s bottom line.
• If the sum value of the business is worth less than its individual parts. This is also referred to as reverse synergy and could be a sign that it’s time to restructure the company or consider divesting poor performing divisions to a third party.

How Corporate Reorganization Works

No matter what your reason for reorganizing your business; having a step by step plan for execution in place can determine whether these changes will be successful and well-received by the rest of the company. Here are a few steps for restructuring a business to get you started:

1. Understanding the Issues and Developing a Clear Strategy

To start, you need to define your reason for restructuring the business and develop a fool-proof strategy to achieve those goals. Without a proper understanding of the reasoning behind the transition, it can be difficult to make the necessary changes and move in the right direction. Make sure you have a clearly defined strategy that aligns with your long term business goals you can work towards.

2. Defining What’s Working and What’s Not

Evaluate which aspects of the business are failing and what is working. Try coming up with a list of the potential reasons the previous structure wasn’t successful. This will help you avoid these pitfalls moving forward and the opportunity to rely on the company’s strengths. A thorough understanding of a company’s strengths and weaknesses can be vital to success and making positive changes for the future. Through proper evaluation, you can maintain your strengths while simultaneously eliminating weaknesses at the same time.

It can also be a good idea to reach out to current employees for feedback. In many cases, employees have valuable insight into areas of the business you might not be aware of. Reaching out to your team can also serve to help them feel valued and heard; which can help overall productivity and acceptance of the upcoming changes.

3. Creating a Reorganization Model

Develop a reorganization model that clearly defines roles and responsibilities. The model can also incorporate where employees’ skills and expertise lie. While the structure might change as you begin to execute your plan, this type of model creates a visual representation of what needs to be done and helps keep employees and stakeholders on the same page as to what might be changing.

4. Communicating With Your Team

After you have your model and have decided on the best course of action, explain what you are planning with the rest of the company. Communicate in clear terms what the new model depicts and could mean for the people involved. Clear communication and transparency is essential when delivering the news to your staff; especially for those in a higher position as they may need to answer questions and ensure that everything is running smoothly. It also plays an important role in overcoming employee resistance to change; which is one of the more common obstacles companies experience when attempting to restructure.

5. Executing Your Reorganization Plan

Now that you have your plan in place and have communicated your intentions with the rest of the company it’s time to implement the reorganization process. As you move forward, you may realize that further adjustments need to be made to ensure you are meeting your goals. However, before you start making changes, remember that there could be a learning curve. Give your team a chance to acclimate to the new structure beforehand.

Consulting Financial Management Experts

Reorganizing a company can be an exciting time. When implemented correctly it could resolve operational issues, increase profitability, and improve overall efficiency. However, without the right plan and execution, it can go terribly wrong. That’s why if you are considering restructuring a business; it’s best to consult a financial management company to help you through the process. These businesses have vast experience dealing with companies in financial hardships and know how to avoid common pitfalls that could make or break your company.

If your business is in debt or considering bankruptcy, before turning your business upside down; contact the experts at Reorganization Management Group for help. We have a diverse background in debt relief and turnaround services and can help make your business more successful and your life more rewarding.

Whatever your financial dilemma may be, we have commercial services that can help you. Contact us now at 866-364-9161 and ask to speak to an advisor or you can fill out a no-cost/no-obligation form .

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A 5-Step Process for Reorganizing After a Merger

• Stephen Heidari-Robinson,
• Suzanne Heywood,
• Barry Edmonstone-West

Only 16% of reorgs deliver on their objectives.

Reorganizations can be a useful management tool for finding new value and are often essential as part of a merger or acquisition integration. Getting this type of reorganization right allows business units from the merging companies to be brought together smoothly, corporate activities to be standardized and streamlined, people to be aligned behind desired outcomes, and integration synergies to be delivered quickly.

• Stephen Heidari-Robinson is the Managing Director of Quartz Associates (a consulting and software company that delivers organizational change), a visiting fellow at Oxford University, and co-author of Reorg – How to Get It Right (HBR Press, 2016) and 10 Must Reads – Managing in a Downturn.
• Suzanne Heywood is the chair of Quartz Associates, Managing Director of Exor, Chair and acting CEO of CNHI and the co-author of Reorg – How to Get It Right (HBR Press, 2016) and 10 Must Reads – Managing in a Downturn.
• BE Barry Edmonstone-West is a FTSE100 Strategy Director.

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Reorganization Plan Template

What is a Reorganization Plan?

A reorganization plan outlines the changes that need to be made to an organization in order to improve its efficiency and effectiveness. It includes objectives, strategies, and timelines that can be used to reorganize a business, department, or team. The plan should be tailored to the specific needs of the organization and should be regularly updated to ensure that the business remains on track.

What's included in this Reorganization Plan template?

• 3 focus areas
• 6 objectives

Each focus area has its own objectives, projects, and KPIs to ensure that the strategy is comprehensive and effective.

Who is the Reorganization Plan template for?

The Reorganization Plan template is designed for organizational leaders and HR teams who want to create a plan to restructure their company or department. The template provides a step-by-step guide to help you develop an effective plan that focuses on improving organizational efficiency and employee engagement. It can also be used to create plans to improve customer service.

1. Define clear examples of your focus areas

Focus areas are the main themes for improvement that you want to address with your reorganization plan. Examples of focus areas could include improving organizational efficiency, enhancing employee engagement, or improving customer service. It is important to be clear and specific when defining your focus areas in order to create an effective plan.

2. Think about the objectives that could fall under that focus area

Objectives are the goals that you want to accomplish in each focus area. These should be specific and measurable, and should be tailored to the needs of the company or department. When developing objectives, make sure they are realistic and achievable. Examples of some objectives for the focus area of Improve Organizational Efficiency could be: Increase Team Collaboration, and Streamline Processes.

3. Set measurable targets (KPIs) to tackle the objective

Key Performance Indicators (KPIs) are measurable targets that you set in order to track your progress in achieving the objectives. KPIs should be specific and measurable, and should be tailored to each objective. For example, if you have an objective of increasing team collaboration, a KPI could be to increase the number of collaborative projects.

4. Implement related projects to achieve the KPIs

Projects (Actions) are the steps that need to be taken in order to achieve the KPIs. These should be specific and measurable, and should be tailored to the needs of the company or department. For example, if you have a KPI to decrease time spent on non-essential tasks, a related project could be to reorganize teams.

5. Utilize Cascade Strategy Execution Platform to see faster results from your strategy

Cascade is a strategy execution platform designed to help organizations quickly and easily create, manage, and track their reorganization plans. The platform has a range of features that can help you plan, execute, and measure the success of your strategic plan. With Cascade, you can easily identify what’s working and what’s not, and make adjustments to ensure success.

Reorganization rules that work

Reorganization doesn’t have to be an overwhelming undertaking, and, in fact, it can be quite rewarding for a company and its employees—especially if approached in a methodical way. In this episode of the McKinsey Podcast , McKinsey senior partner Aaron De Smet and partner Shannon Hennessy speak with McKinsey Publishing’s Monica Toriello about how companies should think about and execute reorganizations to become much more agile and to set themselves up for success in the face of disruption.

Podcast transcript

Monica Toriello: Hi, I’m Monica Toriello, an editor with McKinsey Publishing. Today we’ll be talking about a topic that’s very challenging for many companies: reorganization. Joining me to talk about reorganization are two experts on this topic. We have Shannon Hennessy, who is a partner in our Dallas office and who recently coauthored an article titled “ Rethinking the rules of reorganization .” Welcome, Shannon.

Shannon Hennessy: Thanks, Monica.

Monica Toriello: And Aaron De Smet is a partner in Houston who is one of the firm’s foremost experts on organizational design and reorganization, and has been on a McKinsey Podcast before, talking about agility . Thanks for joining us today, Aaron.

Aaron De Smet: Thank you, Monica. Glad to be here.

Monica Toriello: Reorganization can be a scary word for people at any level of a company, whether you’re an executive or a manager or an employee. But some see reorganization as a necessary evil. Is it? Or is that the wrong way to look at it?

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Shannon Hennessy: Monica, I see reorganization as a way of life in today’s corporate environment. There’s unprecedented disruption in the way that companies are working with higher requirements for things like analytics, consumer touchpoints, and complex and remote work.

There’s also a really big shift in the underlying demographics and expectations of the workforce. I’d say most companies these days are conducting a pretty big reorganization every couple of years, and some companies have actually stopped viewing it as an event in and of itself. Instead they’ve started to view it as part of how they evolve and do business. There are big benefits to reexamining the way you organize to get work done beyond just cost savings. There are ways to free up resources to invest in new capabilities and make things faster and more agile.

Aaron De Smet: I would echo that. We’re seeing—because of the pace of change in the market and a lot of turbulence caused by globalization, technology, hypercompetition, mergers and acquisitions, and regulation and deregulation—it’s getting harder and harder to stay competitive if you don’t reorganize fairly frequently. Some companies do continue to see it as a necessary evil because every time they reorganize, it’s superdisruptive.

Many of our clients and other companies experience not only a lot of distraction and disruption but also, in the end, after all that work, they feel like they didn’t get all the objectives out of the reorganization that they had hoped for. The success rate is actually pretty low.

One piece of research that we did found that only about 23 percent of reorganizations are deemed successful by the companies as they look back on them. Of the unsuccessful reorganizations, most of the failed attempts actually unwound a number of the changes they had made because they weren’t working.

A lot of this is because they’re doing it wrong. The fear of doing a reorganization actually contributes to the problem. Many of these companies are waiting until the problem is so dire and so urgent that they can’t possibly wait anymore.

Then they’re just dealing with the fires and the problems that are such a burning platform that, by the time they’re done, they’ve missed a number of opportunities right in front of them. One of the biggest success factors that we’ve seen is design for the future . Design for where you’re headed, not for the problems of the past. You need to fix the problems, of course. But if you only fix the problems, by the time you’re done with your reorganization, you’ll already need to be doing another one.

Monica Toriello: It’s interesting that you talk about companies doing it consistently or doing it every couple of years. But Aaron, in the past, you’ve talked about the organizational structure and the governance and processes being a stable backbone. That would last five to ten years. Reconcile for us what it means to have a stable backbone but also to be constantly thinking about organizational redesign.

Aaron De Smet: The concept is that some of the things that you might change in your organization would be under any circumstances pretty massively disruptive. But there are a lot of other things that don’t need to be disruptive, that can feel fluid.

A natural evolution like this is just part of working differently and better, and for the people who have to change some aspect of how they work, it doesn’t feel that different. So getting this basic platform right, of the stable things that won’t need to change that often, getting that right can make all the other changes a lot easier. The analogy I often use is a smartphone. If you were to try to hard wire in every possible capability, what you’d end up doing is saying, “I need my smartphone to have every possible functionality and capability built into the hardware and operating system.”

Even if you got it exactly right—you might get your brand-new smartphone and it does everything you ever dreamed you wanted it to do—then two weeks later, Shannon comes up to me and says, “Hey, did you hear about this thing called Uber? It’s awesome. I just say I want a car, and somebody comes and picks me up. It’s great.”

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And I say, “I want Uber.” Now that I’ve hard wired everything into the smartphone, I have to design a whole new phone if I want that functionality. Whereas a smartphone that’s left huge areas of functionality completely blank, open, to be designed, to be determined for the future, there’s still a platform. There’s still hardware and an operating system that doesn’t change very frequently. But now I can just download the app. And it’s not hard. It doesn’t feel disruptive at all. It feels great. I download an app and then I can just start using it.

Organizations need to start building themselves like that. The minimum spec hardware and operating system on which I can apply dynamic capabilities. In some ways, a natural fluid reorganization would be deleting one app and adding a new one.

Monica Toriello: You mentioned designing for the future. Does either of you have good stories about companies that have done that well?

Aaron De Smet: This success factor is what I call the Wayne Gretzky rule. Wayne Gretzky is a famous hockey player. One of the best ever. When he was asked how he was so successful, he said, “I skate to where the puck is going to be, not to where it is now.”

We were helping a company that had just made a couple of acquisitions. It was putting them all together into this new company, and it was figuring out what structure it wanted. As it was figuring out who the business leaders were going to be at the top of the house—the commercial organization was organized regionally—I said, “Well, where’s the future of the business? You’ve divvied this up so that all the regional leaders have roughly the same book of revenue. But where’s the growth?” The answer was, “Actually, almost all the growth that we see coming in the next three to five years is all in two countries: the US and China.”

I said, “What if, instead of having three or four regional leaders, you had five or six regional leaders? And one of them was just the head of the US and one was just the head of China?” They didn’t debate it for long. After a short period of time, they said, “That’s exactly the right answer. That’s the level of focus we need.” The only difference was that the first time we had built the regional structure, we looked at historic revenue. In the next conversation, the question was, “Where’s all the growth?”

Shannon Hennessy: I’ve seen lots of companies that have made big shifts toward global growth. I think another common example of designing for the future in the retail and consumer sector is preparing for the growth of e-commerce and digital.

Several years back, I had many clients who were looking at their e-commerce businesses and saying, “Wow. This is dilutive, right? And look at the span of control that some of these folks are working with. I have these buyers who are buying not that much sales volume.”

But there was another one of my clients who looked at that and said, “This is where the world is moving. This is where the puck is going,” to use Aaron’s analogy. So the client said, “I am going to plan to resource this business based on a three- to five-year business plan. And I am going to be prudent about how many resources I’m going to put into place. I’m going to think about attracting talent and building an organization to deliver that.”

Monica Toriello: Much of what you’ve talked about is actually resource reallocation . It’s very hard for companies to do. In your recent article, Shannon, you talk about one of your provocatively stated rules, which is “Play favorites.” It’s about setting different cost-reduction targets and different investment levels for different business units. It seems to make perfect sense. It’s intuitive, right? But in your experience, why is it so hard for companies to do that?

Shannon Hennessy: It’s hard because folks are rightly so protective of making sure that they don’t make big cuts or shake things up in what are the core growth-driving and revenue-driving areas of the business. What I’ve seen is oftentimes those areas of the business have gotten a bit of a free pass when you’re looking at organizational change, because people are fearful of rocking the boat. Because the pace of change has been so fast in business and in the consumer and retail sectors specifically, a lot has changed for those functions. They’re feeling overburdened and overworked and probably not as effective as they should be on some of the newer areas and new capabilities.

What I’ve seen to be quite empowering is taking the time to get the facts. Take a look at what’s been going on in those functions. When we’ve done that, we’ve found that there’s a bigger need to reshape those functions than there is the back-office functions, which folks have looked at time and time again for efficiency.

Aaron De Smet: There’s also a mind-set issue that a lot of our clients don’t realize they have: leaders naturally equate the size of their empire with how much power and decision authority they should have, and the size of their empire is often based on historic success. “It’s been a successful business. It’s a big business. It makes a lot of revenue. I have a lot of resources to keep that engine going and keep that revenue coming in. Therefore, I should decide how we allocate resources.”

And guess what? When you ask people where they want to allocate resources, they usually want to allocate them back to themselves. The person in the new business that’s still small—it’s where all the growth opportunity is, where all the innovation is, where in the next five years the whole market is going to go. Even if you can see it coming, even if you had a crystal ball and you knew that, it would be very hard in a current organization that isn’t playing by the new rules that Shannon’s talking about. If they’re playing by the old rules, even if they knew, they would have a hard time getting resources because all the authority to make decisions about resources sits where the resources already are.

Shannon Hennessy: That is what can be so powerful about undertaking a holistic look at your organization. When you do take those cross-functional, cross-business-unit lenses that Aaron’s referring to, you can make those shifts, and it can be an incredible moment for an organization to line up with where the puck is going.

Monica Toriello: That actually relates to one of your other rules, Shannon, which is, “Ask for bad ideas.” That’s basically a way of saying, “Has somebody who’s objective, or have several somebodies who are objective, made decisions for the good of the entire business rather than just for one business unit or for one group within the business?” What are some ways that you’ve seen companies do this well?

Shannon Hennessy: I had one client who had the CFO, who was one of the more progressive change agents in the organization, commit to taking a look at all the ideas that the individual teams were surfacing, and particularly the ones that had been rejected through some of the approval processes that led into the final decision making. He would flag and surface ones he thought may have been rejected too soon. I had another client that said, “For every individual area, I’m going to have the functional leader, say the chief marketing officer, in charge. But I’m also going to make someone equally in charge who is going to be a fresh set of eyes, a provocateur, someone who’s going to make sure that the person who may have built that organization is considering different ways of doing things and new lenses.”

Aaron De Smet: It also helps to be aware of some of the conventions and orthodoxies that you are carrying with you. Companies don’t always have the self-awareness of what their own biases are. Most of those biases are toward what’s made them successful historically.

These are the companies that, if they can’t get past that, rather than disrupt themselves and continue to be at the top of their game, they’re going to be disrupted by somebody else. This has happened; this isn’t new. It’s just becoming a bigger problem as the pace of change accelerates.

Monica Toriello: One way to come up with ideas, whether they’re good ideas or bad ideas, is to look around you, look at what competitors are doing. Shannon, in your fourth rule, you talk about some people paying too much attention to benchmarks. Is it fair to say that benchmarks can be a thought starter for idea generation, but they shouldn’t be the be-all and end-all?

Shannon Hennessy: Yes. That’s one of the questions I get the most often. Everyone loves to hate on benchmarks, and I can understand where that comes from. There are people who have deep scars from watching benchmarks get misused and from trying to compare one company to another in a way that they aren’t similar.

That said, I have not seen anything be as effective as benchmarks in triggering some hard questions, such as “Why does it take 50 percent more resources in your organization to do an activity that’s quite similar to a peer?” Or, “How is it that this process takes a peer company 30 percent as much time as it does for you?”

Aaron De Smet: The broader point is, get data and information and case examples and anecdotes and benchmarks. Get all that to inform your thinking, to open your thinking, to ask the right questions. But don’t let the benchmark make the decision.

Don’t look at a best practice and feel like you should copy it just because somebody said it was a best practice. Use it to inspire you, inform you, educate you.

Monica Toriello: Does either of you have stories about companies that either used benchmarks or external inspiration well? And companies that didn’t?

Shannon Hennessy: I was sitting in a meeting with the head of planning for a consumer company, and we were looking through some of the benchmarks that we had brought to the conversation. He said to me, “Tell me which one of these companies looks exactly like us.” And I said, “None.” But I think that’s oftentimes where folks’ minds go. So they throw it out, and they don’t want to entertain the conversation.

But what was magical in the room was, we started saying, “Let’s just take a look at what peer company A, B, and C are doing. They’re not exactly like you. Here’s why they do it a little bit differently.” As we worked through that, we worked through maybe 20 different sets of ideas for things other companies were doing. Only about five to ten of them were applicable to my client. But they were applicable in a way that they hadn’t really thought about. When benchmarks work well, they work, as Aaron was saying, as a source of inspiration.

Rethinking the rules of reorganization

Aaron De Smet: I have seen companies look at something and say, “Wow, if we automate that, we should be able to take out a lot of cost.” The problem is they sometimes will take the cost and the people out before they have actually built the systems that fully automate what they’re trying to do. That can be disastrous. Or they look at something and say, “We’re 20 percent over.” Then they just give a budget cut of 20 percent. But why are we at 20 percent over? It may have been 40 percent over in some places and resourced exactly right in others. You have to get a little more granular. You can’t apply benchmarks mindlessly.

Monica Toriello: Shannon, another rule that you talk about in your article is to stop wasting people’s time. Skip meetings where you’re not needed and stop producing reports that are not impactful. It’s a common gripe, right? “I have to go to another meeting.” Do you have any specific tips for how to stop having so many meetings?

Shannon Hennessy: My absolute favorite tip is standing meetings. It’s amazing. If you ask folks to just get rid of the chairs and stand up, you’ll see how much faster they’ll go and how much they’ll get on track. It doesn’t work all the time, but I think it’s a physical and visible way of cracking down.

Take a look through a calendar. Blow up meetings that have existed for a long time but that are a waste of everyone’s time. Ask the question, “How many people actually need to be in the meeting?” Think of how many meetings you see where it’s someone’s boss, the boss’s boss, and the boss’s boss’s boss all there in the same room, and just think about how you could actually get that done with fewer people. It not only eliminates time but it’s also incredibly empowering for the organization to think that way.

Aaron De Smet: The first thing I would ask is, “Is this a decision-making meeting, or a problem-solving meeting, or an information-sharing meeting?” If it is an information-sharing meeting, the first question is, “Do you need it, or could you just do email?” If you do need it, you should be able to keep it to 30 minutes max.

A problem-solving meeting should have a small team of people doing real work. You should never have a problem-solving meeting that’s more than six to ten people. If it’s a decision-making meeting, you need to make sure that you’re spending almost all your time debating and discussing the decision. It’s important not only to list the decisions you’re making but also to list who the decision makers are, because it should almost never be everyone in the room.

It’s OK to have 30 people in the room, but you shouldn’t have 30 decision makers. You shouldn’t even have ten decision makers. You should have two or three. Everyone else in the room is either there to inform them and advise them, or just to hear the discussion because they’re going to have to go execute it and it’s a lot more efficient to not have to translate.

If you have three decision makers, all three better show up, and if they don’t, you should cancel the meeting. If they feel like they don’t need a meeting to make the decision, then cancel the meeting. This sounds very basic, but almost nobody does this.

Monica Toriello: For managers or executives who have just gone through a reorganization, what are some day-to-day experiences that have proved to them, even anecdotally, that this reorganization is working? That we did the right thing?

Aaron De Smet: There are a couple of questions you can ask. One is, “How easy is it to get things done?” And if the answer is, “It’s not,” then, “Why not? How quickly are we able to make and execute good decisions? Do you know the value you’re adding?”

Ask someone what their job is, what value they deliver. Let’s say they work on an important report that comes out every week—who uses the report, how do they use it, and what would the problem be if suddenly we weren’t able to deliver the report. They should be able to answer. If it were me, and I were doing management by walking around, I would ask, “Who is the one person who most benefits from your report?” Then I would go talk to that person, ask them, and see if the answers match. I have had situations where I’ve asked that question, and the person says, “This report is great; it delivers a ton of value.” And I’ve had situations where the person says, “I delete that every time I get it; I never read that report.”

Shannon Hennessy: Aaron, that reminds me of Office Space .

Aaron De Smet: It does. The reason Office Space is so funny and such a cult classic is because it is so true in so many ways. Shannon, you’ve probably had many Dilbert moments, where you just can’t believe what you’re seeing. But it’s true. This stuff really happens. They’re often really good, smart people. These are things that evolve slowly over time, and things just get disconnected. It just ends up in a place that’s kind of crazy. You don’t know how this happened.

Shannon Hennessy: Monica, when I think about measuring whether or not a change has been successful, I typically think about it in two ways. I think about the military part of it and the marketing part of, as I call it, the military and the marketing campaign.

On the military campaign, if a reorganization is successful, it should’ve delivered its objectives. Whether those were financial objectives or cost objectives or strategic objectives. It’s important to measure those sorts of things. Did it meet the time lines, et cetera.

And then there’s the marketing-campaign side. One of the favorite things I love to ask is simply, “Are people clear on their roles in the new organization?” That’s oftentimes one of the biggest failure modes. I also like to find out if they’re asking, “Is this the sort of company that I’d recommend to a friend to work with?” Is it? Do they have job satisfaction? Are they actually feeling better about the new company than they were about the company before?

Aaron De Smet: For companies that have been reorganizing poorly for a long time, haven’t followed any of these rules, fundamentally don’t have clear roles, and have a bunch of problems—usually the first one is somewhat painful, or at least hard. I don’t know if painful is the right word, it’s hard. If you get it right once, you can start allowing your organization to reorganize more incrementally, fluidly, and easily in a way that’s not painful and not even hard.

It’s actually quite easy and natural. But if your starting point is really bad, then the first one usually is somewhat of a heavy lift. To go back to this idea, once you get it right the first time and have built that stable backbone upon which you can then overlay much more fluid and dynamic capabilities—the questions that Shannon was asking about: is this a place you would recommend for someone else to work, is it easy to get things done, how energized are you to come into work every day.

The whole feeling of a place when the answer is, “It is easy to get things done, and I love being at work. I’m hugely energized when I’m here. I would totally recommend this place”—there is a buzz and an electricity that’s pretty remarkable and pretty special. If you get the reorganization right, you can help it to feel that way.

Shannon Hennessy: I do believe it’s hard to do an effective reorganization without at least some moments of pain. Typically, what you’re trying to do is change the way the organization works. An organization is a bunch of people who have feelings, right? And legacies. No pain, no gain is probably more apropos for me, rather than when folks avoid painful decisions—they usually just prolong it, or drag out the agony. That said, I think you can manage it in a humane way.

If you do a good job, you might have some pain in the beginning associated with change. Most people still don’t love change, but you emerge on the other side with an organization that is happier and has less pain than it started with.

Monica Toriello: Let’s end on that positive note. Thank you very much for joining us today. If you’re interested, you can go to McKinsey.com for more on organizational redesign and agility.

Aaron De Smet is a senior partner in McKinsey’s Houston office, and Shannon Hennessy is a partner in the Dallas office. Monica Toriello is a member of McKinsey Publishing, based in the New York office.

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Reorganization: Definition, Types, and Purposes

What Is a Reorganization?

A reorganization is a significant and disruptive overhaul of a troubled business intended to restore it to profitability. It may include shutting down or selling divisions, replacing management, cutting budgets, and laying off workers.

A supervised reorganization is the focus of the Chapter 11 bankruptcy process, during which a company is required to submit a plan for how it hopes to recover and repay some if not all of its obligations.

Understanding Reorganization

The function of a bankruptcy court is to give an insolvent company the chance to submit a reorganization plan. If approved, the company can continue to operate and postpone paying its most pressing debts until a later date.

Key Takeaways

• A court-supervised reorganization is the focus of Chapter 11 bankruptcy, which aims to restore a company to profitability and enable it to pay its debts.
• A company in financial trouble but not bankrupt may seek to revive the business through a reorganization.
• In either case, reorganization means drastic changes to the company's operations and management and steep cuts in spending.

To get the approval of a bankruptcy judge, the reorganization plan must include drastic steps to reduce costs and increase revenue. If the plan is rejected or is approved but does not succeed, the company is forced into liquidation. Its assets will be sold and distributed to its creditors.

A reorganization requires a restatement of the company's assets and liabilities as well as negotiations with major creditors to set schedules for repayment.

Drastic Changes

Reorganization can include a change in the structure or ownership of a company through a merger or consolidation, spinoff acquisition, transfer, recapitalization , a change in name, or a change in management. This part of a reorganization is known as restructuring .

A reorganization to stave off bankruptcy may have a favorable outcome for shareholders. A reorganization in bankruptcy is usually bad news for shareholders.

Not all reorganizations are overseen by a bankruptcy court. The management of an unprofitable company may impose a drastic series of budget cuts, staff layoffs, management ousters, and product line revisions with the aim of restoring the health of the company. In such cases, the company is not yet in bankruptcy and is hoping to stave it off. This is sometimes called a structural reorganization.

Supervised Reorganization

When supervised by a court during bankruptcy proceedings, a reorganization focuses on restructuring a company's finances. The company is temporarily protected from claims by creditors for full repayment of outstanding debts.

Once the bankruptcy court approves the reorganization plan, the company will restructure its finances, operations, management and whatever else is deemed necessary to revive it. It also will begin paying its creditors according to a revised schedule.

Chapter 11 vs. Chapter 7

U.S. bankruptcy law gives public companies the option of reorganizing rather than liquidating. Through the terms of Chapter 11 bankruptcy, firms can renegotiate their debts to try to get better terms. The business continues operating and works toward repaying its debts.

The process is complex and expensive. Firms that have no hope of reorganization go through Chapter 7 bankruptcy, also called liquidation bankruptcy.

Who Loses During Reorganization?

A court-supervised reorganization is typically bad for shareholders and creditors, who may lose part or all of their investments.

Even if the company emerges successfully from the reorganization, it may issue new shares, which will wipe out the previous shareholders.

If the reorganization is unsuccessful, the company will liquidate and sell off any remaining assets. Shareholders are last in line to receive any proceeds and receive nothing unless money is left over after repaying creditors, senior lenders, bondholders, and preferred stock shareholders in full.

Structural Reorganization

A reorganization by a company that is in trouble but not yet in bankruptcy is more likely to be good news for shareholders. Its focus is to improve company performance, not stave off creditors. It often follows the entrance of a new CEO.

In some cases, the second type of reorganization is a precursor to the first. If the company’s attempt at reorganizing through something like a merger is unsuccessful, it might next try to reorganize through Chapter 11 bankruptcy.

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Are You Thinking About Business Reorganization?

In business, there are no guarantees. At some point, you may find your small business struggling to make ends meet or overburdened by debt. If you’re looking to increase your company’s bottom line , consider business reorganization.

Some business owners panic when they think of bankruptcy organization. But before you stress out, remember two things. First, there are multiple types of reorganizations beyond bankruptcy. And second, bankruptcy reorganization is not the same thing as liquidation.

Read on to learn about reorganization and how it can help a struggling company stay in business.

What is business reorganization?

Reorganization, or business restructuring, is a process where a company does an overhaul of its current strategy, setup, and operations. Typically, businesses go through reorganization when they have financial troubles, new owners or staff, or a structural change. When a business reorganizes, it generally changes its business tax structure .

In addition to a tax structure change, businesses that reorganize may change up their marketing strategies, staff, products or services, or business name.

If your business is struggling, don’t ignore the warning signs. A successful company restructure can result in increased profits, operational efficiency, and debt paydown.

However, business reorganization efforts don’t always work. Ineffective reorganization may lead to bankruptcy. And, businesses that go through bankruptcy reorganization might end up going through liquidation.

Reorganizations might be voluntary or mandatory, depending on the circumstances.

Types of business restructuring

There are a number of reasons a business might go through reorganization. Three common types of restructuring include:

Identity or management

Mergers and acquisitions.

Read on to learn about each type of business reorganization.

Sometimes, a business might voluntarily decide to reorganize itself. A company may choose to reorganize to boost profits.

Identity or management reorganization occurs when a business updates things like its name, mission statement, offerings, and operations. If you go through this type of reorganization, you might also make changes to your staff, like adding or removing employees, promoting workers, or moving around departments.

Changing up your business’s strategy and operations may result in increased performance. But, it might also leave your customers confused. And, identity reorganization could cost you loyal customers. Before you change your business’s identity, conduct a risk analysis to determine if the change is worth it.

If nothing else works, failing businesses may opt for bankruptcy reorganization. Businesses that go through this type of reorganization start by filing bankruptcy. But, the company continues operating.

Bankruptcy reorganization extends a business’s life through financial restructuring. The company may also change up other strategies, like marketing, management, or mission.

Through bankruptcy reorganization, businesses make smaller payments to creditors. Through these special arrangements, the company attempts to pay down its debts.

Bankruptcy reorganization vs. liquidation

Unlike reorganization, liquidation is a type of small business bankruptcy where the business closes and divides its assets to pay creditors.

Through bankruptcy reorganization, there is hope that the business will successfully continue to operate. As a result, the business is still obligated to pay down its debts. On the other hand, liquidation of business wipes out many personal and business debts. But, the business closes up shop.

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A merger is when two businesses come together to form a new company. An acquisition occurs when a business buys out another business. Reorganization is necessary when a merger or acquisition takes place.

When a business merges with another company, the joined forces may need to restructure to develop a new identity. And, the new combined business may need to let some employees go or make management changes.

If a business is acquired by another company, restructuring typically includes staff, management, and strategy changes.

Is business reorganization worth it?

Are you thinking about reorganizing your business? If so, consider consulting a small business lawyer . And, be sure to weigh the pros and cons.

Advantages of business reorganization can include:

• Boosted profits
• Increased efficiency
• Business life extension
• Improved strategy
• Better financial arrangements

Disadvantages of business reorganization can include:

• The chance that it may not work
• Decreased employee morale
• Confused customers
• Significant time investment
• Setbacks in cash flow

Frequently assess your business’s health by analyzing your books. Patriot’s online accounting software makes it easy to track your incoming and outgoing money, monitor unpaid invoices, and reconcile your bank statements. And, we offer free, USA-based support. Get your free trial now!

This article has been updated from its original publication date of April 30, 2019.

This is not intended as legal advice; for more information, please click here.

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• Section 2: Managing Successfully
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Steps in Managing a Reorganization

• Define the problem.
• Determine whether existing jobs and structures are meeting department goals.
• Consider what factors contribute to effectiveness of jobs and structure.
• Verbal, written, and computer surveys
• Problem-solving teams
• Review committees
• Distribution of functions throughout the organization (definition of functions to be performed, groupings of functions, and the relationships among functions)
• Vertical and horizontal authority relationships
• Communication/decision-making process (how formal decisions are made and by whom, and the information system established for decision-making)
• Internal departmental policies (the decisions, rules, or guidelines established in production, personnel, purchasing, research and development, and other areas)
• The attributes of department employees (includes abilities, skills, experience, and other behavioral issues)
• Reasons for reorganization
• Before and after organization charts
• Job descriptions for new, changed positions
• Names, titles of employees to be affected by changed or eliminated jobs, new reporting lines, physical relocation, or reduction in time
• Review of Affirmative Action impact
• Order of potential layoffs for career positions based on seniority points
• Notices to go to unions
• Identify the different groups who will need communication and the different messages/information they will need
• Determine series of review and update meetings with management
• Determine schedule of informational meetings with staff
• Plan communications outside department to announce reorganization
• Set up individual meetings with employees projected for layoff and for those employees whose jobs will change significantly
• Determine skills needed for each position.
• Compare current skills with what is needed.
• Determine training needs and resources.
• Design and implement training.
• Review, reassess, and gather input during implementation.
• Determine methods to get feedback during implementation.
• Include systems that will provide regular feedback from management, staff, and client groups.
• Build an effective team (also see Chapter 14, Team Building )
• Clarify mission, goals, and standards for success.
• Schedule regular staff meetings.
• Facilitate communication by remaining open to suggestions and concerns.
• Act as harmonizing influence by looking for opportunities to mediate and resolve minor disputes.
• Encourage all team members to share information.
• Support brainstorming and consensus decision-making where appropriate.

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What Is Business Restructuring?

Why and How Businesses Restructure After Bankruptcy

• Why Does a Business Restructure?

How Restructuring Works

Business restructuring vs. liquidation.

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If a business is facing liquidation, it may opt instead for Chapter 11 bankruptcy—a type of bankruptcy that grants a debtor the space and legal protection to restructure their business and pay back creditors over time. In short, it provides a second chance. But the success of a Chapter 11 bankruptcy depends on how a business handles its critical restructuring period.

To restructure a business successfully, a debtor must make strategic, fundamental changes to the company and also have the resources to conduct major upheaval.

Historically, most successful restructures are carried out by large businesses, while small businesses have gone from bankruptcy to liquidation. However, a recently enacted federal law called the Small Business Reorganization Act (SBRA) aims to reduce restructuring costs for individuals and small firms. 

Learn how business restructuring really works and how it could help get back your business back on its feet. 

All businesses have an archetypal structure, developed as a way to establish how the organization functions to execute its goals. A company may be organized based on specialized function, with accountants in the finance department and marketers in the marketing department, for example. Or a company may be structured around business lines or divisions. 

When a company goes through restructuring, it’s organizing the system in a new way to increase the effectiveness of the operation, often changing its original structure. A restructure will likely also include reconfigurations, or more surface-level changes such as adding, splitting, transferring, or dissolving business units that don’t necessarily impact the deeper structure. 

In 1995, for example, IBM restructured its company into a back-to-front matrix, so that divisions such as technology would develop products that the front-end (marketing) team would then serve to customers. This represented a reverse of the company’s previous matrix, and the restructuring was viewed as a success.

Most restructuring under Chapter 11 includes relieving debt obligations that stifle growth, terminating unprofitable contracts, or selling unproductive assets. Delta successfully avoided Chapter 11 in 2007 in part by renegotiating its pilot contracts, for example, saving the company around $280 million annually.

Why Does a Business Restructure After Bankruptcy?

A Chapter 11 bankruptcy offers particular incentives to restructure. Per their restructuring plan, a debtor might be able to do things they couldn’t legally do during the normal course of business, such as pausing or amending debts or rejecting unprofitable contracts. 

A company may decide to restructure without the threat of bankruptcy. This may occur to keep up with shifting markets, or when a company enacts other organizational changes, such as a merger with another business. 

After filing for Chapter 11 Bankruptcy, a debtor will draw up a written disclosure statement and a restructuring plan. The plan of reorganization aims to convince creditors and the court that, upon completion of the plan, the company will achieve financial solvency. 

Plan Approval

Under the SBRA, small businesses can significantly reduce their Chapter 11 Bankruptcy costs. For example, small businesses no longer have to pay for a creditors’ committee to oversee and vote on restructuring, a historically prohibitive cost for smaller firms.  

To be considered a small business debtor, the total, noncontingent liquidated secured and unsecured debts of the organization must amount to $2,566,050 or less.

The plan approval process for a company filing Chapter 11 Bankruptcy includes the following:

• A debtor has a 120-day period to file an exclusive restructuring plan. The court may extend this exclusivity period up to 18 months. After that period, a creditor or case trustee may file competing plans to the court.
• The reorganization plan must demonstrate that a business will be capable of meeting all financial obligations going forward, including debts, federal income, and payroll taxes.
• The court appoints a U.S. trustee to oversee proceedings and make sure the plan stays on track. 
• The debtor must report balance sheets, regular earnings and profitability reports, compliance reports, and more to the court throughout the restructuring process. 
• An automatic stay temporarily protects debtors from “all judgments, collection activities, foreclosures, and repossessions of property.”

Debt Management

In addition to implementing functional organizational changes, a company will probably include debt management in its restructuring plan. There are many programs and incentives that allow for debt management under Chapter 11:

• Under certain conditions, a debtor can implement debtor-in-possession (DIP) financing, which means that a debtor can finance certain debt using funds that it may not have been able to previously. This debt repayment outweighs all other debt or equity.
• A restructuring can include preparing some or all company assets for sale. Buyers won’t have to contend with typical legal liabilities (such as potential fraud), making these assets highly desirable. 
• A restructuring enables debtors to legally void certain contracts if they cannot meet the requirements. The contractor must renegotiate or shoulder the loss.
• A restructuring also allows for special exit financing, which helps the company emerge from bankruptcy. Exit financing could make a company more attractive to investors, since it denotes low liability and the company is actively trying to get out of debt.  

If a business doesn’t comply with its Chapter 11 restructuring plan—such as a failure to obtain financing or a failure to file monthly reports—the court will dismiss the case. The trustee may also move to file a Chapter 7 bankruptcy if the debtor does not successfully reorganize and get a debt payment plan approved, thus liquidating the debtor’s assets.

Liquidation means a trustee will convert anything of value into cash, which is used to pay creditors. 

Chapter 7 provides relief to companies, regardless of the amount of debt they owe or whether a debtor is solvent or insolvent. Unlike restructuring, much of the debtor’s property will no longer belong to them. It will be put into the hands of the trustees handling the liquidation. 

Key Takeaways

• A business may avoid liquidation by restructuring its corporate framework and debt.
• Companies are granted leniency during Chapter 11 restructuring, such as the ability to cancel unprofitable contracts and suspend foreclosures.
• A restructuring plan is often a collaborative effort between debtors, creditors, an appointed U.S. trustee and the court. 
• Chapter 11 Bankruptcies were previously unaffordable for small businesses, but the SBRA has reduced costs for these firms.

IBM. “ IBM Highlights, 1990 - 1995 ,” Page 26. Accessed March 26, 2021.

Delta News Hub. " Delta Pilots Ratify Contract ." Accessed March 26, 2021.

American Bar Association. " The Small Business Reorganization Act: Big Changes for Small Businesses ." Accessed March 26, 2021. 

United States Courts. " Chapter 11 - Bankruptcy Basics ." Accessed March 26, 2021.

IRS. " Chapter 11 Bankruptcy - Reorganization ." Accessed March 26, 2021.

Harvard Business Review. " A Primer on Restructuring Your Company’s Finances ." Accessed March 26, 2021.

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Plan of Reorganization for Small Business Under Chapter 11

Form Number:  B 425A

Category:  Small Business Forms

Effective on February 19, 2020

This is an Official Bankruptcy Form. Official Bankruptcy Forms are approved by the Judicial Conference and must be used under Bankruptcy Rule 9009.

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Business Reorganization Plan

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Business owners should periodically assess how to improve financial results. One course of action often considered is whether a business should be restructured in order to achieve required performance levels. Before pursuing this strategy, a business reorganization plan should be thoroughly evaluated. Important discussion points will normally include why restructuring might be needed, what is required and how to implement the resulting strategies.

One of the most common reasons to restructure a company is the desire to prepare it for a sale, merger or employee buyout. Another common motivation involves reorganizing the business for transfer to family members. With a challenging economy, a third reason for possible restructuring is the difficulty of keeping sales results above a financial break-even point. An additional key reason to review a business reorganization is in preparation for major growth involving new products or services. In some other cases, legal and financial reasons might dictate a restructuring alternative.

The business restructuring process typically involves diagnosis, planning and implementation. The diagnosis phase is similar to a feasibility study and includes assessing a variety of possible business scenarios. The planning stage requires the formulation of detailed operational and strategic plans. Implementation will be closely tied to the business restructuring plan that was approved by business owners and all other important stakeholders. Anticipate that the diagnosis and planning parts of the process will require a minimum of several months and often more than a year.

When a reorganization plan is developed and approved, the resulting plan effectively supersedes the company’s original business plan. This is likely to be more detailed and time-sensitive than a traditional plan. One key to success is how effective business owners and managers are in adapting to changes during the implementation phase. 

This template will be primarily useful for company leaders when preparing a company’s development strategy. You can describe in detail all stages of the implementation of your strategy and define the responsible persons and indicators to measure the effectiveness of the work.

Also, this template will be useful for startups when preparing for a meeting with business angels or investment funds. You can describe a plan of action to reorganize the work of the company and indicate the required funds and the payback period of the investment.

Crisis managers can use the slides of this template when preparing to reorganize unprofitable businesses and to implement measures to increase profits. University professors can use the slides in this template to prepare courses on business restructuring or business planning in a crisis.

Also, this template can be used by engineers when drawing up a plan for reorganizing production lines and creating modern high-tech automated systems.

Business Reorganization Plan is a professional and modern template that contains seven stylish and fully editable slides. If necessary, you can change all the elements of the slide in accordance with your corporate requirements. This template will be useful for startups, company executives, crisis managers, financial analysts. The Business Reorganization Plan template will organically complement your presentations and will be a great addition to your collection of professional presentations.

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Consultation on regulatory technical standards and guidelines on business reorganisation plans.

• Status: Closed
• Deadline: 9 JUNE 2015

Consultation paper

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BSG response to Consultation Paper (EBA-CP-2015-05 on business reorganisation plans), 5 June 2015

(483.86 KB - PDF) Last update 9 July 2015

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FTX files amended reorganization plan, expects $14.5 bln-$16.3 bln for distribution

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FBI working towards nabbing Scattered Spider hackers, official says

The U.S. FBI is working towards charging hackers from the aggressive Scattered Spider criminal gang who are largely based in the U.S. and western countries and have breached dozens of American organisations, a senior official said.

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Diamond sports negotiating distribution agreements as they reorganize.

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Last February Major League Baseball Commissioner Rob Manfred announced plans to launch a national ... [+] in-market streaming service as soon as 2025. To be successful it would need at least 15 teams. If Diamond Sports, with Amazon as an investor, successfully emerges from bankruptcy protection, MLBs plan will be delayed. (Photo by Julio Aguilar/Getty Images)

Over the past month the financially endangered Diamond Sports Group, the nation’s largest regional sports network, has been active in negotiating a renewal of carriage fees agreements with the three largest pay-TV distributors, Comcast Comcast , Charter and DirecTV. A successful renewal would be beneficial to the financial fortunes of Diamond Sports as they work toward restructuring their core business in the aftermath of filing for Chapter 11 in March 2023. A bankruptcy hearing is scheduled for June 18.

According to Sportico , the three MVPDs account for 81% of total affiliate revenue and collectively, reach 38 million household subscribers. In addition, the three MVPDs account for about 69% of total traditional pay-TV households.

Charter: In a multiyear agreement, announced in early April, Diamond Sports and Charter Communications renewed their distribution package. Under the new agreement, subscribers to Charter’s Spectrum TV Select Plus package can access Diamond’s channels and stream content on Bally’s Sports app. The previous agreement expired at the end of February and the RSN stayed on air throughout the renewal negotiations. Charter is the second highest pay-TV distributor with 13.5 million U.S. customers.

DirecTV: One month later, Diamond Sports Group reached a renewal agreement with DirecTV, the third largest pay-TV distributor. With the agreement, DirecTV customers with access to either Choice, Ultimate or Premier tiers will continue to have access to the RSN. In addition, Bally Sports content can be streamed via their app. Furthermore, any DirecTV or DirecTV STREAM subscribers without any access to Diamond Sports will be able to purchase a Direct-to-Consumer (DTC) product.

Also in early May, Diamond Sports reached a multiyear renewal agreement with Cox Communications, a smaller pay-TV distributor.

Comcast: Days prior to the DirecTV announcement, renewal distribution talks with Diamond Sports and Comcast reached an impasse, resulting in the RSN being removed from the nation’s largest pat-TV distributor. The agreement had expired last fall, but the two parties agreed to a six-month extension window with no resolution. Besides cost, another negotiating issue is on which tier the RSN channels will be located. Comcast wants the channels on a premium tier with a higher monthly cost which received a pushback from Diamond Sports. With playoff games across the NBA and NHL, for now, the blackout will only impact MLB games.

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Amazon Amazon : A court hearing on Diamond Sports reorganization plan is scheduled with the U.S. Bankruptcy Court in Houston on June 18. A component of Diamond Sports restructuring strategy is a $115 million investment from Amazon that would provide a 15% ownership in the RSN. As part of the deal, Amazon can invest another $50 million in the first nine months after bankruptcy protection. As a primary partner, Amazon Prime Video would be able to stream games from Diamond Sports.

With the possibilty of ceasing operations, Diamond Sports had been having discussions with NBA and NHL franchises about ending their relationship after the 2023-24 season. This “Cooperation Agreement” was never implemented. To enable Amazon Prime Video to stream local sporting events, Front Office Sports reports Diamond Sports has offered adjustments toward franchises toward a longer agreement including “rights fees modifications” and digital rights.

According to The Athletic , if Diamond Sports reorganization successfully emerges from bankruptcy with a streaming plan in place, it could impact MLBs direct-to-consumer strategy. In February MLB Commissioner Rob Manfred announced plans to launch an in-market streaming service hopefully needing about half of the 30 MLB teams to succeed. The planned DTC offering would be available nationwide. A successful launch is predicated on the supposition Diamond Sports would not successfully emerge from bankruptcy protection.

At present, MLB could already launch with potentially nine teams to launch the streaming service as soon as 2025. There are three teams whose games are already being produced by MLB in 2024; Arizona Diamondbacks, Colorado Rockies and San Diego Padres. With Warner Bros Discovery closing their RSN operations, the decision impacted three more teams; Houston Astros, Pittsburgh Pirates and Seattle Mariners. Three of the other teams are in the final year of the agreement with Diamond Sports; Cleveland Guardians, Minnesota Twins and Texas Rangers.

In the event that Diamond Sports reorganization plans are approved, there will not be enough teams for MLBs to launch a viable national direct-to-consumer strategy, at least in 2025. At this time, one month before the hearing, most observers believe the bankruptcy court will approve Diamond Sports reorganization plan.

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FTX customers may get their money back, but not gains from crypto price increases

Some customers of the failed cryptocurrency exchange FTX could receive the full value of the money they lost if a court approves the company's bankruptcy plan.

However, they will not see the gains on their holdings of bitcoin and other digital assets that have occurred over the past two years, despite massive increases in the value of those financial instruments since the FTX exchange collapsed in November 2022.

According to a news release filed Tuesday by FTX, which is going through reorganization, 98% of FTX creditors, including individual investors, who had $50,000 or less with the company will receive the funds they lost, in cash, within 60 days of a reorganization plan going into effect. The plan must still be approved by a court and by creditors.

“We are pleased to be in a position to propose a chapter 11 plan that contemplates the return of 100% of bankruptcy claim amounts plus interest for non-governmental creditors," said John J. Ray III, who took over as chief executive officer of FTX alongside his role as chief restructuring officer.

That plan is possible mostly because FTX and its sister company, Alameda Research, held a number of other assets that the reorganization team has sold off. These included shares in Anthropic, the Amazon-backed artificial intelligence startup now valued at nearly $20 billion. FTX said it had sold shares in the company worth $900 million this year.

But some claimants have objected to their crypto assets being valued at November 2022 prices as part of the bankruptcy. Since that date, the price of bitcoin has climbed more than 250%.

In February, the Justice Department appointed an independent examiner, Robert Cleary, to review potential issues with parties involved in the bankruptcy, including past investigations into the FTX debtors and potential conflicts of interest in the FTX bankruptcy involving FTX’s law firm, Sullivan & Cromwell.

A spokesperson for the firm did not immediately respond to a request for comment.

Adam Moskowitz, a lawyer representing some of the FTX bankruptcy claimants, said that even with the unusually generous returns to the claimants outlined by the company, outstanding questions about the bankruptcy process remain.

"We have serious concerns," Moskowitz said.

The Sullivan and Cromwell law firm has denied any wrongdoing.

FTX acknowledged that some claimants might find the value of what's coming back to them through the bankruptcy to be insufficient.

But at the time of its collapse, the release said, FTX held "only 0.1% of the Bitcoin and only 1.2% of the Ethereum customers believed it held."

Because of that, FTX — referred to as a debtor in the bankruptcy case — has "not been able to benefit from the appreciation of these missing tokens during the chapter 11 cases," the news release said.

"Instead, the debtors have had to look to other sources of recoverable value to repay creditors."

In March, former FTX chief Sam Bankman-Fried was sentenced to 25 years in prison for masterminding the fraud that led to the exchange's collapse.

Rob Wile is a breaking business news reporter for NBC News Digital.

Boy Scouts no more: Organization changes name to Scouting America as it exits bankruptcy after storm of controversy

The  Boy Scouts of America  is changing its name for the first time in its 114-year history and will become Scouting America. It’s a significant shift as the organization emerges from bankruptcy following a flood of sexual abuse claims and seeks to focus on inclusion.

The organization steeped in tradition has made seismic changes after decades of turmoil, from finally allowing gay youth to welcoming girls throughout its ranks. With an eye on increasing flagging membership numbers, the Irving, Texas-based organization announced the name change Tuesday at its annual meeting in Florida.

“In the next 100 years we want any youth in America to feel very, very welcome to come into our programs,” Roger Krone,  who took over last fall as president and chief executive officer,  said in an interview before the announcement.

The organization began  allowing gay youth in 2013  and ended a blanket ban on  gay adult leaders in 2015.  In 2017, it made the historic  announcement that girls  would be accepted as Cub Scouts as of 2018 and into the flagship Boy Scout program —  renamed Scouts BSA  — in 2019.

There were nearly 1,000 young women in the  inaugural class of female Eagle Scouts  in 2021, including Selby Chipman. The all-girls troop she was a founding member of in her hometown of Oak Ridge, North Carolina, has grown from five girls to nearly 50, and she thinks the name change will encourage even more girls to realize they can join.

“Girls were like: ‘You can join Boy Scouts of America?’” said Chipman, now a 20-year-old college student and assistant scoutmaster of her troop.

Within days of the announcement that girls would be allowed, Bob Brady went to work. A father of two girls and a proud Eagle Scout himself, the New Jersey attorney eagerly formed an all-girls troop. At their first weekend gathering with other troops, the boys were happy to have the girls involved but some adult leaders seemed concerned, he recalled. Their worries seemed to melt away as soon as the girls led a traditional cheer around the campfire.

“You could see a change in the attitude of some of the doubters who weren’t sure and they realized, wait, these kids are exactly the same, they just happen to have ponytails,” said Brady. His daughters are among the 13 girls in his troop and 6,000 girls nationwide who have achieved the vaunted Eagle Scout rank.

Like other organizations, the scouts  lost members during the pandemic,  when participation was difficult. After a highpoint over the last decade of over 2 million members in 2018, the organization currently services just over 1 million youths, including more than 176,000 girls and young women. Membership peaked in 1972 at almost 5 million.

The move by the Boy Scouts to accept girls throughout their ranks strained a bond with the Girl Scouts of the USA, which sued, saying it created marketplace confusion and  damaged their recruitment efforts . They reached a settlement agreement after a judge  rejected those claims , saying both groups are free to use words like “scouts” and “scouting.”

While camping remains an integral activity for the Boy Scouts, the organization offers something for everyone today, from high adventures to merit badges for robotics and digital technology, Krone said: “About anything kids want to do today, they can do in a structured way within the scouting program.”

The Boy Scouts’ $2.4 billion  bankruptcy reorganization plan  took effect last year, allowing the organization to keep operating while compensating the more than 80,000 men who say they were sexually abused as children while scouting.

Angelique Minett, the first woman chairperson of Scouts BSA, gets excited about the future of scouting when she sees the about 20-person youth council from across the United States help guide the program by raising issues important to them, like sustainability, and things that they’d like to see changed, like the fit on some of the uniforms.

“When we think scouts we think knots and camping, but those are a means to an end,” Minett said. “We are actually teaching kids a much bigger thing. We are teaching them how to have grit, and we’re teaching them life skills and we’re teaching them how to be good leaders.”

The organization won’t officially become Scouting America until Feb. 8, 2025, the organization’s 115th birthday. But Krone said he expects people will start immediately using the name.

“It sends this really strong message to everyone in America that they can come to this program, they can bring their authentic self, they can be who they are and they will be welcomed here,” Krone said.

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Apple Will Revamp Siri to Catch Up to Its Chatbot Competitors

Apple plans to announce that it will bring generative A.I. to iPhones after the company’s most significant reorganization in a decade.

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By Tripp Mickle ,  Brian X. Chen and Cade Metz

Tripp Mickle, Brian X. Chen and Cade Metz have been reporting on Apple’s plans for generative A.I. for this article since the fall of 2023.

Apple’s top software executives decided early last year that Siri, the company’s virtual assistant, needed a brain transplant.

The decision came after the executives Craig Federighi and John Giannandrea spent weeks testing OpenAI’s new chatbot, ChatGPT . The product’s use of generative artificial intelligence , which can write poetry, create computer code and answer complex questions, made Siri look antiquated, said two people familiar with the company’s work, who didn’t have permission to speak publicly.

Introduced in 2011 as the original virtual assistant in every iPhone, Siri had been limited for years to individual requests and had never been able to follow a conversation. It often misunderstood questions. ChatGPT, on the other hand, knew that if someone asked for the weather in San Francisco and then said, “What about New York?” that user wanted another forecast.

The realization that new technology had leapfrogged Siri set in motion the tech giant’s most significant reorganization in more than a decade. Determined to catch up in the tech industry’s A.I. race, Apple has made generative A.I. a tent pole project — the company’s special, internal label that it uses to organize employees around once-in-a-decade initiatives.

Apple is expected to show off its A.I. work at its annual developers conference on June 10 when it releases an improved Siri that is more conversational and versatile, according to three people familiar with the company’s work, who didn’t have permission to speak publicly. Siri’s underlying technology will include a new generative A.I. system that will allow it to chat rather than respond to questions one at a time.

The update to Siri is at the forefront of a broader effort to embrace generative A.I. across Apple’s business. The company is also increasing the memory in this year’s iPhones to support its new Siri capabilities. And it has discussed licensing complementary A.I. models that power chatbots from several companies, including Google, Cohere and OpenAI.

An Apple spokeswoman declined to comment.

Apple executives worry that new A.I. technology threatens the company’s dominance of the global smartphone market because it has the potential to become the primary operating system, displacing the iPhone’s iOS software, said two people familiar with the thinking of Apple’s leadership, who didn’t have permission to speak publicly. This new technology could also create an ecosystem of A.I. apps, known as agents, that can order Ubers or make calendar appointments, undermining Apple’s App Store, which generates about $24 billion in annual sales.

Apple also fears that if it fails to develop its own A.I. system, the iPhone could become a “dumb brick” compared with other technology. While it is unclear how many people regularly use Siri, the iPhone currently takes 85 percent of global smartphone profits and generates more than $200 billion in sales.

That sense of urgency contributed to Apple’s decision to cancel its other big bet — a $10 billion project to develop a self-driving car — and reassign hundreds of engineers to work on A.I.

Apple has also explored creating servers that are powered by its iPhone and Mac processors, two of these people said. Doing so could help Apple save money and create consistency between the tools used for processes in the cloud and on its devices.

Rather than compete directly with ChatGPT by releasing a chatbot that does things like write poetry, the three people familiar with its work said, Apple has focused on making Siri better at handling tasks that it already does, including setting timers, creating calendar appointments and adding items to a grocery list. It also would be able to summarize text messages.

Apple plans to bill the improved Siri as more private than rival A.I. services because it will process requests on iPhones rather than remotely in data centers. The strategy will also save money. OpenAI spends about 12 cents for about 1,000 words that ChatGPT generates because of cloud computing costs.

(The New York Times sued OpenAI and its partner, Microsoft, in December for copyright infringement of news content related to A.I. systems.)

But Apple faces risks by relying on a smaller A.I. system housed on iPhones rather than a larger one stored in a data center. Research has found that smaller A.I. systems could be more likely to make errors, known as hallucinations, than larger ones.

“It’s always been the Siri vision to have a conversational interface that understands language and context, but it’s a hard problem,” said Tom Gruber, a co-founder of Siri who worked at Apple until 2018. “Now that the technology has changed, it should be possible to do a much better job of that. So long as it’s not a one-size-fits-all effort to answer anything, then they should be able to avoid trouble.”

Apple has several advantages in the A.I. race, including more than two billion devices in use around the world where it can distribute A.I. products. It also has a leading semiconductor team that has been making sophisticated chips capable of powering A.I. tasks like facial recognition.

But for the past decade, Apple has struggled to develop a comprehensive A.I. strategy, and Siri has not had major improvements since its introduction. The assistant’s struggles blunted the appeal of the company’s HomePod smart speaker because it couldn’t consistently perform simple tasks like fulfilling a song request.

The Siri team has failed to get the kind of attention and resources that went to other groups inside Apple, said John Burkey, who worked on Siri for two years before founding a generative A.I. platform, Brighten.ai. The company’s divisions, such as software and hardware, operate independently of one another and share limited information. But A.I. needs to be threaded through products to succeed.

“It’s not in Apple’s DNA,” Mr. Burkey said. “It’s a blind spot.”

Apple has also struggled to recruit and retain leading A.I. researchers. Over the years, it has acquired A.I. companies led by leaders in the field, but they all left after a few years.

The reasons for their departures vary, but one factor is Apple’s secrecy. The company publishes fewer papers on its A.I. work than Google, Meta and Microsoft, and it doesn’t participate in conferences in the same way that its rivals do.

“Research scientists say: ‘What are my other options? Can I go back into academia? Can I go to a research institute, some place where I can work a bit more in the open?’” said Ruslan Salakhutdinov, a leading A.I. researcher, who left Apple in 2020 to return to Carnegie Mellon University.

In recent months, Apple has increased the number of A.I. papers it has published. But prominent A.I. researchers have questioned the value of the papers, saying they are more about creating the impression of meaningful work than providing examples of what Apple may bring to market.

Tsu-Jui Fu, an Apple intern and A.I. doctoral student at the University of California, Santa Barbara, wrote one of Apple’s recent A.I. papers . He spent last summer developing a system for editing photos with written commands rather than Photoshop tools. He said that Apple supported the project by providing him with the necessary G.P.U.s to train the system, but that he had no interaction with the A.I. team working on Apple products.

Though he said he had interviewed for full-time jobs at Adobe and Nvidia, he plans to return to Apple after he graduates because he thinks he can make a bigger difference there.

“A.I. product and research is emerging in Apple, but most companies are very mature,” Mr. Fu said in an interview with The Times. “At Apple, I can have more room to lead a project instead of just being a member of a team doing something.”

Tell us how your law firm is using A.I.

We’d like to hear from lawyers working with generative A.I., including contract lawyers who have been brought on for assignments related to A.I. We won’t publish your name or any part of your submission without contacting you first.

Tripp Mickle reports on Apple and Silicon Valley for The Times and is based in San Francisco. His focus on Apple includes product launches, manufacturing issues and political challenges. He also writes about trends across the tech industry, including layoffs, generative A.I. and robot taxis. More about Tripp Mickle

Brian X. Chen is the lead consumer technology writer for The Times. He reviews products and writes Tech Fix , a column about the social implications of the tech we use. More about Brian X. Chen

Cade Metz writes about artificial intelligence, driverless cars, robotics, virtual reality and other emerging areas of technology. More about Cade Metz

Explore Our Coverage of Artificial Intelligence

News  and Analysis

As experts warn that A.I.-generated images, audio and video could influence the 2024 elections, OpenAI is releasing a tool designed to detect content created by DALL-E , its popular image generator.

American and Chinese diplomats plan to meet in Geneva to begin what amounts to the first, tentative arms control talks  over the use of A.I.

Wayve, a London maker of A.I. systems for autonomous vehicles, said that it had raised $1 billion , an illustration of investor optimism about A.I.’s ability to reshape industries.

The Age of A.I.

A new category of apps promises to relieve parents of drudgery, with an assist from A.I.  But a family’s grunt work is more human, and valuable, than it seems.

Despite Mark Zuckerberg’s hope for Meta’s A.I. assistant to be the smartest , it struggles with facts, numbers and web search.

Much as ChatGPT generates poetry, a new A.I. system devises blueprints for microscopic mechanisms  that can edit your DNA.

Which A.I. system writes the best computer code or generates the most realistic image? Right now, there’s no easy way to answer those questions, our technology columnist writes .