Corporate debt restructuring
A viable business carrying a debt structure it cannot service, and a lender group that has to agree on what replaces it.
Part of Ascent Pinnacle’s structured credit practice.
Most restructurings are not about whether a business is worth saving. They are about whether a group of lenders with materially different security positions can be brought to the same answer at the same time.
The underlying problem is usually simpler than the negotiation: debt sized against one set of assumptions — a construction timeline, a demand forecast, a collection cycle — meeting a reality that did not match. The business generates cash; it does not generate cash on the schedule the facility demands.
When this applies
- The business is operating and viable, but repayments fall due before the cash to meet them arrives.
- The debt was sized against a timeline or an assumption that did not hold.
- Several lenders hold materially different security positions and no natural majority exists.
- Enforcement would recover materially less than a restructuring, but no lender wants to be first to say so.
What makes it difficult
A restructuring requires the consortium to agree, and lenders with the weakest security often have the least to lose from enforcement and the most to gain from holding out. That asymmetry is what stalls most Indian restructurings, and it is not solved by argument.
It is solved by construction: a proposal in which holding out no longer improves any individual lender's outcome. That usually means recoveries differentiated by security position rather than distributed pro rata.
The second failure mode is sequence. Circulating commercial terms before enforcement rights and standstill are settled invites every lender to negotiate the part that protects them individually, and the group never converges.
How it is structured
Establish what the business actually generates
Rebuild the cash flow against the operating cycle as it is — collection timing, seasonality, the real conversion period — rather than against the schedule the facility assumed.
Map every lender's true position
Who is secured on what, who is unsecured in substance, and what each would actually recover in enforcement. That determines who will agree and who will hold out.
Resize the debt to the cycle
Reschedule repayment to follow the cash the business generates, dated to the operating cycle rather than to calendar quarters.
Differentiate recoveries by position
Build a waterfall that pays according to security rather than pro rata, so that holding out ceases to be the profitable strategy.
Settle the intercreditor first
Enforcement rights and standstill terms are agreed before commercial terms are circulated. This ordering decides whether the group converges at all.
What a capital provider tests
- What the business generates and when, against what it is committed to
- Each lender's security, and what it would genuinely recover in enforcement
- Whether the revised schedule is serviceable under a downside, not only a base case
- What the promoter is contributing to the reorganisation
- Whether the asset is realistically enforceable at all, which often changes the arithmetic entirely
Discuss a situation
Bring the position, the existing debt schedule and the timeline. We come back with a view on whether it is structurable and what it would take.
Discuss a mandate