Debt restructuring
What is debt restructuring??
Debt restructuring is a process by which a company reorganises its debts with the aim of improving its liquidity and solvency.
Benefits of debt restructuring
Improved liquidity: By adjusting the terms of existing debts, your business can free up cash flow that can be used for day-to-day operations.
Reduced costs: Renegotiating interest rates can result in lower interest payments, thus reducing the overall cost of debt.
Extended payment periods: Extending the payment period can make financial obligations more manageable.
Avoiding insolvency: Restructuring can prevent bankruptcy and allow the company to continue operating.
Everything you need to know:
- Improved liquidity: Adjusting payment terms can free up cash flow, providing the company with more capital to operate and grow.
- Reduced costs: Negotiating lower interest rates can lower the overall cost of debt.
- Extended payment periods: Extending the time to repay debts can reduce pressure on monthly cash flow.
- Insolvency prevention: Avoiding bankruptcy by making debts more manageable and sustainable in the long term.
FAQs
Various debts can be restructured, including bank loans, lines of credit, credit card debts, among others.
Restructuring may affect your credit rating in the short term, but in the long term it can improve the overall financial health of your business, benefiting your credit.
The time required varies depending on the complexity of the debt and negotiations with creditors, but can generally take from a few weeks to several months.
