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.
The need for a corporate debt restructuring often arises when a company is going through severe financial crisis and is having difficulty in meeting its obligations to its lenders. If the condition of the company threatens its existence, it can negotiate with its creditors to reduce these burdens and increase its chances of avoiding bankruptcy.
The reorganization of a company’s outstanding obligations are often achieved by reducing the burden of the debts on the company by, in turn, decreasing the interest rates payable on the loan and increasing the time within which the company has to pay up its obligation back to the lenders.
We associate ourselves with clients, understand and assess the client’s business model and future plans.
- Advice on the overall restructuring plan.
- Analysing and reviewing existing debt and security documentation so as to prepare the borrower for negotiations.
- Advising on the CDR process and coordinating with all parties involved in the CDR proposal.
- Prepare relevant documents required by the lenders to consider the restructuring plan ensuring that the package conforms to CDR guidelines.
- Drafting/ reviewing CDR documents.
- Interface and negotiate with lenders at all levels and the CDR Cell to obtain a viable restructured financial package.
- Assist in implementation of CDR package by coordinating with all lenders.
Companies under financial crisis often grapple to service debt obligations. It becomes essential to reach consensual debt restructuring between a borrower and its creditors that yields the best return to all parties concerned. Successfully achieving CDR entails specialised skill sets and knowledge of the regulatory framework. As an independent party, we will actively manage the debt restructuring process and deal with issues faced in an objective and timely manner for a successful outcome. Our team consist of people who are well versed with the banking laws & practices and experts in the area relating to preparation of financial model, CDR and restructuring proposals.