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Definition: Debt Restructuring is the strategy and process of modifying existing debts into new, more favorable ones. Typically it takes the form of a court ordered or mutual agreement, and is used by organizations (facing Cash Flow problems or other financial trouble) to reduce the amount of debt obligations and/or renegotiate the terms of debt agreements in order to achieve certain advantages, which typically include improving or restoring Liquidity or to prevent foreclosure and liquidation, and to continue operations. It is a major part of Recapitalization. |
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