Debt Rescheduling

Debt Rescheduling When a debtor company has difficulty in repaying debt or finds the burden of interest too heavy, it may try to renegotiate the terms of the loan. This may take the form of an extension of the existing loan period, an entirely new loan, or deferment of the interest payment. It may also take the form of conversion of the loan amount into equity shares at par or at a premium. Highly leveraged companies sometimes have recourse to this kind of conversion as a rehabilitation exercise.

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