Corporate Debt Restructuring

When a company goes bankrupt, creditors will come calling for the assets to obtain as much equity as possible. The reality is that neither creditors nor firms want to see a bankruptcy.

To avoid it, a firm that has a lot of debt and is struggling to meet its obligations may undergo a voluntary process known as corporate debt restructuring. This is a process that enables a firm’s multiple credit facilities to work together in order to restructure the payments and liabilities on the balance sheet. This is an important mechanism, because it helps protect shareholders, who could lose their investment if a firm goes under.