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:
“Even the poor student studies and is taught only political economy, while that economy of living which is synonymous with philosophy is not even sincerely professed in our colleges. The consequence is, that while he is reading Adam Smith, Ricardo, and Say, he runs his father in debt irretrievably.”
—Henry David Thoreau (1817–1862)