What is the definition of Restructuring?

Restructuring typically favors debt and bond holders. "Typically" is used here because in some extraordinary circumstances, such as the auto bailouts of a few years ago, the government may intervene to support employee rights at the expense of bond holders. But, in the majority of cases, the bond holders will either have their debt settled at a reduced amount, restructured as to tenor or principal or interest rate, or subordinated to a new lender willing to infuse the corporation with fresh capital.

Restructuring bankers serve troubled businesses that are facing, coping with or recovering from bankruptcy. Corporate restructuring is when a company modifies its debt, structure or operations and is usually undertaken when the company is in real difficulty, such as Chapter 11 bankruptcy for example. It is hoped that as a result of restructuring, the underlying problems will be reduced through the services of financial advisors and legal counsel.

• A Debt Restructuring allows the company to change the payment terms or schedule to make them easier to meet.
• A Company Restructuring changes either the structure or operations and can cut costs or sell off assets in order to improve the operations of the company.