debt restructuring
≈ 2 min read
Names in other languages
- Italianoristrutturazione del debito
- Bahasa Indonesiarestrukturisasi kredit
- Русскийреструктуризация долга
- Englishdebt restructuring
- Polskikonwersja długu
- 日本語デットエクイティスワップ
- עבריתהסדר חוב
- 한국어재무 개선 작업
Article bodies are English and are not machine-translated. A name in another language is not a translation of the article.
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 to improve or restore liquidity so that it can continue its operations. Replacement of old debt by new debt when not under financial distress is called "refinancing". Out-of-court restructurings, also known as s, are increasingly becoming a global reality.
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 to improve or restore liquidity so that it can continue its operations. Replacement of old debt by new debt when not under financial distress is called "refinancing". Out-of-court restructurings, also known as s, are increasingly becoming a global reality.
Exit consent
Exit consent is a formal agreement that allows a majority group of creditors holding sovereign bonds to change the non-financial terms of the bonds in a way that makes the bonds effectively worthless for the minority holdouts, motivating them to accept a restructuring offer. Thus creditors willing to restructure can outmaneuver holdouts by using the supermajority voting features of existing bonds to secure changes, which reduce their value as they are tendered in exchange for restructured debt. Government bond issued by sovereign nations are often perceived as safe investments. But over time, countries in difficult economic situations have needed to restructure their debt structure, or see their national economy collapse. During that process, the country must restructure the outstanding debt by offering its old bonds holders new instruments that reflect new financial terms. It is a process that sees the emergence of holdout creditors who refuse the proposed restructuring, posing a problem to the reorganization process the holdout problem. Therefore, the threat of an exit consent is used to encourage (or coerce) minority creditors to accept the exchange offer so they are not left with diminished bonds.
Text derived from https://en.wikipedia.org/w/index.php?oldid=1376572339 under CC BY-SA 4.0; modifications have been made.