An external reorganization:

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An external reorganization often calls for old creditors and shareholders to make concessions in order to establish a feasible arrangement. This may involve renegotiating debts, altering the company's ownership structure, or other necessary changes to improve the company's financial standing. This process is typically done outside of court, but may still involve the creation of a creditor committee or other outside parties to oversee the reorganization process. An external reorganization is not necessary for liquidation, as the goal is typically to keep the company operating rather than shutting it down entirely.

An External Reorganization