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:
“The debt was the most sacred obligation incurred during the war. It was by no means the largest in amount. We do not haggle with those who lent us money. We should not with those who gave health and blood and life. If doors are opened to fraud, contrive to close them. But don’t deny the obligation, or scold at its performance.”
—Rutherford Birchard Hayes (1822–1893)