The legal process that provides a company, either private or public, or even a sovereign entity who are going through some financial problems and cash flow distress, to renegotiate and reduce their loans for the purpose of improving as well as restoring their financial management and further rehabilitate so as to continue their working operations in future efficiently is termed as debt restructuring. The legal written contract that predefines all the terms and conditions related to this restructuring is referred to as debt restructuring agreement.
When compared with bankruptcy, debt restructuring is quite more less expensive as well as preferable alternative available for the companies to resolve financial distress efficiently and more exquisitely. The main process involved with debt restructuring agreement is to reduce debts and provide extension for payment terms.
Hence the debt restructuring agreement is the most preferable practice used by the organization at the time of financial problems to rehabilitate their company’s financial matters ardently in the industry.
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