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Debt/Equity Swap
(redirected from Debt-to-Equity Swap)

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Debt/Equity Swap
A situation in which a debtor (which is a company) replaces the debt held by one or more creditors with a percentage of ownership in the company. A debt-equity swap often occurs if the company would otherwise be unable to repay the creditor(s) anything without going bankrupt. However, the swap may be a result of change from a debt-based to an equity-based capital structure. In either case, these swaps are often considered part of a company's attempt to restructure itself. Some debt agreements restrict the debtor's ability to force a debt-for-equity swap.


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Earlier Wednesday, GM said it has failed to secure the consent of enough holders of GM bonds for its debt-to-equity swap plan.
Lenders took the reins of South Korea's fourth-largest vehicle maker last year through a pounds 561 million debt-to-equity swap that rescued it from collapse.
 
 
 
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