Decision to Restructure

Richard Marney () and Timothy Stubbs ()
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Timothy Stubbs: Dentons

Chapter Chapter 5 in Corporate Debt Restructuring in Emerging Markets, 2021, pp 111-138 from Springer

Abstract: Abstract Torrential rains (a negative credit shock) have caused flooding that threatens the fox’s life (a pending payment default). In flight, the stork is able to espy a path to refuge and points this out (the need to undertake remedial action, possibly including a debt restructuring). There is resistance. The fox’s predicament becomes more precarious as did that of the Bank of Commerce in the opening Tale. The chapter continues with an exposition of general topics of: (i) precedents and types of restructurings; (ii) differences across markets; and (iii) the distinction between judicial versus nonjudicial restructuring (aka workouts) and the conceptual framework and rationale for the latter. The question of the right “talent” is debated, before moving on to the circumstances and decision-making criteria leading to the choice to proceed to a restructuring. To reinforce these concepts, the chapter returns to the two case studies introduced in Chapter 3 . The chapter ends with a set of key learnings, using again the opening Bank of Commerce tale.

Keywords: Act of God; Balance sheet; Bankruptcy; Borrower; Confidentiality; Consensual restructuring; Coordinating committee; Corporate debt; Debt; Debtor; Cash flow; COVID-19; Credit analysis; Credit monitoring; Currency peg; DFI (development finance institution); Distressed debt; Exogenous shock; Foreign exchange; Emerging market; Exchange rate; Frontier market; INSOL II; INSOL principles; Insolvency; Lender leadership; Loan loss provision; Non-performing loans; Pre-insolvency; Restructure; Restructuring; Restructuring plan; Standstill; Steering committee; Workout (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/978-3-030-81306-2_5

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