debt restructuring

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Debt restructuring

Modification of the terms of a loan to provide relief to a debtor who could otherwise default on payments. The restructuring may involve extending the period of repayment, reducing the total amount owed, or exchanging a portion of the debt for equity in the debtor company. Also see extension, composition, debt-for-equity swap.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Debt Restructuring

The process of a person or business negotiating and agreeing with its creditors to reduce its debt or to revise a repayment plan. Debt restructuring often occurs when a person or company has taken on too much debt and is in danger of bankruptcy. Debt restructuring is beneficial to the person or company requesting it because it often results in a significant discount and/or a more flexible repayment schedule. It is usually less expensive than a bankruptcy would be. Likewise, it is beneficial to the creditors because a bankruptcy will likely result in some debt being discharged; creditors generally prefer debt restructuring because they would rather be paid less than not paid at all. See also: debt-to-equity swap, restructuring, capital structure.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

debt restructuring

An exchange of one or more new debt issues for outstanding debt issues that can occur when the new issues have interest rates and/or maturities that differ from those of the outstanding issues. For example, a firm might offer holders of 9% coupon bonds with 5 years to maturity a new bond with a higher-coupon rate and a 25-year maturity. Creditors having difficulty making interest and/or principal payments often restructure their debt to reduce the size of the interest payments and to extend debt maturity. Also called troubled debt restructuring. Compare restructuring.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
M2 EQUITYBITES-18 June 2010-Ambac agrees debt for equity exchange transactions with debenture holders(C)2010 M2 COMMUNICATIONS http://www.m2.com
Financial services holding company Ambac Financial Group Inc (NYSE:ABK) disclosed on Thursday that it has entered into a series of debt for equity exchanges with certain holders of its 9 3/8% debentures, due August 2011.
International Resource News-25 May 2009-Caspian Holdings Announces Debt for Equity Conversion(C)2009 ENPublishing - http://www.enpublishing.co.uk
United States-based Chrysler LLC's (Chrysler) lenders have reached an agreement with the automaker for a debt for equity swap.
According to President Obama's deadline, the company should successfully complete a debt for equity swap by April 30 or face bankruptcy.
The Scottish multi-millionaire, whose Wyevale group acquired Heighley Gate garden centre near Morpeth this year, bought Newcastle-based Peter Barratt's three-strong chain of centres last year and has shares in the Dobbies garden centre chain, is thought to be preparing to hand over up to 45% of the group's shares to its lender HBOS in a debt for equity swap.
The overhaul would include swapping debt for equity - which would increase the amount of shares in circulation and dilute the value of investors' stakes.
The rating on Tomen will be lowered to ''SD'' (selective default) if an exchange of debt for equity or debt forgiveness is effected, S&P said.
"You we swapping debt for equity. That's what a REIT does.