Commercial Debt Restructuring: Three Options - Restructuring Advisory Group
Restructuring Advisory Group
Because of the volatile economic climate, many companies find themselves facing financial issues. Under such circumstances, it isn’t uncommon to find such companies going for debt restructuring agreements with their creditors. When doing so companies have to look at a variety of choices. They need to look into options such as raising capital or selling assets or even both to name just a few. The whole point here is that companies need to pay off their creditors without allowing their day to day operations to suffer.
As such, in terms of commercial debt restructuring, there are various options that businesses can look into. Some of them are:
A loan workout also goes by the name of loan modification. The process is considered dynamic as per the American Bar Association, which is an organization that includes legal experts from around the country. The aim of the loan workout is twofold – to identify what problem or problems plague the relationship between creditor or creditors and the debtor and to make the adjustments that will improve the relationship.
Unfortunately, there are situations where a loan workout is just not possible. In such a case, it may be in a company’s best interests to file for a Chapter 11 or Chapter 13 bankruptcy petition to gain some financial relief. Under these two options, a business can reorganize its debt in a way that gives it some breathing room and helps manage the debt better. The aim of these two petitions is, again, twofold – to ensure that the business is able to repay the debt and to protect said business from creditors attempting to seize property as repayment.
There are times when the creditor or creditors are willing to provide some leeway. In such a case, they will allow for the payments on the loan to be suspended or reduced for a limited period of time. This time period isn’t fixed; meaning, that the creditors can decide how long this leeway will last. However, the time period is specified in the forbearance agreement.
There are other options too, in case businesses feel that these options aren’t viable. Some of these options include: commercial insolvency, business dissolution or mortgage foreclosure.
These situations are anything but easy. It is always advisable for a business to evaluate its options and take advice from an experienced debt restructuring and commercial loan workout lawyer who can examine your individual circumstances and come up with a solution that is favorable for everyone.
Article Published by : Restructuring Advisory Group
C.H. Brown is the Founder of Restructuring Advisory Group and is an expert in all facets of chapter 11 reorganizations and the restructuring of real estate debt. Mr. Brown first began consulting to chapter 11 clients in 1990. He has written over 300 bankruptcy reorganization plans that provided both debt and equity financing for the real estate projects. In addition to consulting to property owners in chapter 11, Mr. Brown has, as a principal, restructured the debt on 2 of his own projects through chapter 11 and understands the process from the property owners’ perspective.