Below is a free-to-watch video module on debt restructurings. A debt restructuring is a transaction in which a company alters the terms of its debt obligations. This is a critical concept in investment banking, financial analysis and corporate finance.
This video was taken from our Certified Investment Banking Associate (CIBA) program which is our investment banking certification and training program hosted on our BusinessTraining.com platform.
- A debt restructuring, sometimes referred to simply as a restructuring, is a financial transaction in which a company alters the terms of its debt obligations.
- The transaction normally involves a financially distressed business.
- The goal of a debt structuring is to ease debt restrictions in order to continue operation of the company, or just to recover as much funds as possible for the creditors.
- A debt restructuring can take a variety of forms including: an in-court restructuring known as Chapter 11 bankruptcy where the company emerges to continue on.
- A Chapter 7 bankruptcy is basically just a liquidation of assets to recover funds for creditors.
- The results of a debt restructuring can include: a debt-to-equity swap, altered debt terms, raising new equity and distressed asset sale.
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