Since his client has separate
principal and interest payments, once the principal is reduced, his lender will also reduce the amount of the payments.
The company gets a deduction for any
principal and interest payments the ESOP makes.
The CMO bonds are rated "AAA" because they are structured so that the
principal and interest payments generated by the mortgage certificates are more than sufficient to fund
principal and interest payments to the bondholders.
And if the defaults are more than technical, if you need to start deferring some of your principal and interest payments, you should also consider the relief a bankruptcy court may offer.
But if you need to defer principal and interest payments for a given period, and your projections show such a deferral will put your company back on track, your lender may well accept your proposal.
A guarantor may also be involved to see that
principal and interest payments will be received by investors on a timely basis, even if the servicer is unable to collect these payments from the obligors.
Shares may be allocated to employees based on principal payments or
principal and interest payments.