Debt restructuring is a process that allows a private or public company – or a sovereign entity – facing cash flow problems and financial distress, to reduce and renegotiate its delinquent debts in order to improve or restore liquidity and rehabilitate so that it can continue its operations.
Replacement of old debt by new debt when not under financial distress is referred to as refinancing.
Out-of court restructurings, also known as workouts, are increasingly becoming a global reality.
Read more about Debt Restructuring: Motivation, Debt-for-equity Swap, Bondholder Haircuts, Informal Debt Repayment Agreements
Famous quotes containing the word debt:
“Pain and fear and hunger are effects of causes which can be foreseen and known: but sorrow is a debt which someone else makes for us.”
—Freya Stark (1893–1993)