Ask the Advisor – Q. Should my distressed company consider a debt restructuring?
Abstract: Financially troubled companies facing severe cashflow problems may need to seek alternative methods to satisfy their outstanding debts. This column discusses one option: an out-of-court debt restructuring. In a debt restructuring, a company informally renegotiates outstanding debt obligations with its creditors. The resulting agreement is legally binding, and can enable the distressed company to reduce its debt, extend maturities, alter payment terms or consolidate loans. Debt restructuring is a far less extreme and burdensome — not to mention, expensive — alternative to filing for Chapter 11 bankruptcy protection.