Debt and asset restructuring support services have always been and will remain relevant and in demand in all areas of business.
For enterprises, this is an opportunity to settle their debts with creditors. For banks, financial institutions and other lenders, this is an opportunity to clear their balance sheet from distressed assets and release the reserves formed for these assets.
Debt Restructuring: Definition
Debt restructuring – a change in the terms of the contract in order to facilitate the lender’s debt servicing process.
In case of violation of any of the terms of the contract, the debt becomes problematic, interest and fines are charged on the rest of the debt, and over time the debt becomes «impracticable».
The following preferences are available for debt repayment:
|Debt prolongation is the most common option that lenders use in order to get the debt repaid. Typically, the debt repayment period is increased for those problem debtors for whom the debt is more than six months.|
|Refinancing (in the case of loans) – transfer the loan to another financial institution.|
|Deferred payment – the so-called «credit vacation».|
You should remember that in any case, debt restructuring will lead to an increase in the amount of payments, compared with the interest that was paid if the terms of the initial agreement with the creditor were clearly observed. Debt restructuring can be initiated by both the lender and the loan provider.
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HLB Ukraine provides comprehensive support services for corporate debt restructuring transactions.
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