Restructuring

What does it mean

Recently, the word Restructuring has started to be mentioned in the Slovak ecommerce business. It was initiated by Dedoles, and FactCool and Andrea Shop have already embarked on this path. 

More info

Restructuring as a Tool for Saving Not Only E-commerce Brands

Restructuring in Slovakia has been a legally regulated process of business recovery since 2006, aimed at satisfying creditors to a greater extent than would be possible in the case of liquidation bankruptcy. It is an alternative to the complete dissolution of a company and often the last chance to save a brand, jobs, or customer trust. Restructuring is governed by Act No. 7/2005 Coll. on Bankruptcy and Restructuring.

In the Slovak e-commerce segment, this term has become increasingly relevant in recent years. Well-known online brands such as Dedoles, Factcool, and Andreashop are currently undergoing restructuring processes – demonstrating that neither rapid growth nor strong marketing guarantees long-term sustainability without a properly set financial and operational strategy.

Restructuring is Not Bankruptcy

The goal of restructuring is to create a legal space for the entrepreneur to recover – protection from executions and debt collection, while the company can continue its operations. This process takes place under the supervision of the court, a restructuring administrator, and creditors, who together seek a solution to preserve as much value from the business as possible.

Many people confuse restructuring with bankruptcy or company collapse. Although restructuring is declared in accordance with legal procedures precisely in a state of financial problems, its goal is to heal the business, not to close it. 

Time for Optimization

From the perspective of e-commerce, this can mean cost optimization, team restructuring, changing supplier conditions, or seeking strategic partners or investors. The law precisely sets the procedure and deadlines to prevent undue prolongation of proceedings while ensuring that creditors receive more back than they would in a liquidation bankruptcy.

The condition for starting restructuring is that the debtor (in this case, an online retailer) must be a business entity that is realistically threatened with insolvency or is already in it. The goal is always to preserve the viable part of the operation and create conditions for a new start – ideally stronger, more efficient, and more resilient to market fluctuations.

Why is This Happening?

Restructuring a brand in the e-commerce segment is forced by a combination of several factors. It is rarely just the result of one bad decision, but rather a series of situations whose combination is toxic for the brand. Here are the 5 most common reasons why brands like Dedoles, Factcool, or Andreashop end up in restructuring proceedings:

1. Aggressive Growth Without a Stable Financial Foundation

Many brands have bet on rapid expansion and massive growth at the expense of profit (EBITDA). Massive growth brings with it additional costs for new markets – large marketing budgets, massive inventory, HR costs, innovations, etc. When sales slow down or a crisis occurs, the system collapses like a house of cards.

2. Poorly Set Cash Flow and Debt

Even companies with high revenues can collapse if they do not have cash flow under control. Sales "go," but invoices are not paid on time, liabilities increase, and pressure arises from suppliers, banks, or investors. The result is the inability to repay liabilities.

3. Changes in Customer Behavior and Market

The e-commerce market stabilized after the pandemic boom, and consumers began to save more. If a brand does not adapt its strategy (e.g., segmentation, product mix, pricing), it can quickly lose market share. On the other hand, global giants (marketplaces) or global brands with lower prices and larger budgets began to occupy the market. 

4. Weak Internal Processes and Logistical Failures

Insufficient inventory management systems, poor financial and material planning, delayed deliveries, or weak customer service – all of this is often neglected during growth. The result is dissatisfied customers, increased costs, and loss of reputation.

5. Dependence on External Financing or Subsidies

Some companies have operated long-term only thanks to injections from investors or temporary supports (e.g., during COVID). When these sources are exhausted and the company is not profitable on its own, it finds itself in a crisis situation.