Debt Restructuring


DEFINITION of 'Debt Restructuring'

A method used by companies with outstanding debt obligations to alter the terms of the debt agreements in order to achieve some advantage.

BREAKING DOWN 'Debt Restructuring'

Companies use debt restructuring to avoid default on existing debt or to take advantage of a lower interest rate.

A company will often issue callable bonds to allow them to readily restructure debt in the future. The existing debt is called and then replaced with new debt at a lower interest rate.

Companies can also restructure their debt by altering the terms and provisions of the existing debt issue.

  1. Restructuring Charge

    A one-time cost that must be paid by a company when it reorganizes. ...
  2. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  3. Forced Conversion

    The occurrence of an issuer of a convertible security exercising ...
  4. Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. ...
  5. Extraordinary Redemption

    A provision that gives a bond issuer the right to call its bonds ...
  6. Make Whole Call (Provision)

    A type of call provision on a bond allowing the borrower to pay ...
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