Debt Restructuring
Understanding Debt Restructuring
A debt restructuring, which involves a reduction of debt and an extension of payment terms, is usually a less expensive alternative to bankruptcy. The main costs associated with debt restructuring are the time and effort negotiating with bankers, creditors, vendors, and tax authorities.
We provide advisory services to clients to enable them to tide over their temporary liquidity strain through restructuring of their debt obligations. We analyze the viability of the companies and provide for a thoughtful, amenable, concrete and robust solution to enable the company not only to tide over their current cash flow mismatch but also turnaround and embark on a growth.
We offer innovative solutions to our clients for their restructuring needs by approaching lenders with feasible strategies and also for raising additional funds (both for operations as well as for refinancing existing debt)
Types of Debt Restructuring
General
Under the terms of general debt restructuring, the creditor incurs no losses from the process. The creditor decides to extend the loan period, or lowers the interest rate, to enable the debtor to recover from a temporary financial difficulty and pay the debt later.
Troubled
Troubled debt restructuring refers to the process where the creditor incurs losses in the process. This happens when it leads to a reduction in the accrued interest, a dip in the value of the collateral, or conversions to equity. Its most common form of restructuring.