The Role of Business Reinstatement in a Corporate Turnaround
What is Business Reinstatement?
Business reinstatement refers to the process of bringing a dissolved or suspended business back into good legal standing. This may involve:
- Paying any back taxes, fees, or penalties owed
- Filing the necessary paperwork with the state (articles of reinstatement, etc.)
- Resolving any issues that caused the dissolution/suspension in the first place
Reinstating a business can be an important part of turning a struggling company around. It allows the business to resume formal operations legally.
Reasons for Reinstatement
There are several reasons a company may need to reinstate after being dissolved or suspended, including:
- Failure to file annual reports/pay annual fees
- Tax issues like failure to file returns or pay taxes
- Bankruptcy proceedings
- Failure to maintain a valid registered agent/office
Reinstating the business helps resolve these compliance issues.
Benefits of Reinstatement
Reinstating a dissolved or suspended business can provide several benefits as part of a corporate turnaround:
- Resumes formal legal standing and ability to legally conduct business
- Resolves back taxes/fees owed which clears issues with tax authorities
- Allows access to bank accounts/assets that were frozen
- Removes any legal clouds over pending deals/transactions
- Improves ability to obtain financing due to compliance
Overall, business reinstatement helps clear the deck of issues threatening the struggling company so turnaround efforts can focus on recovery.