Ideally, the terms of any debt restructuring deal should be advantageous to the consumer, reducing the total of amount of monthly. In my previous article on debt restructuring i mentioned it was not a magic solution. This briefing provides an overview of the main issues relating to the restructuring of sovereign debt, and outlines the factors which impact the decision as to whether or not to proceed with debt restructuring. A survey of experiences with emerging market sovereign. Debt restructuring is a process that allows a private or public company or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations. The vinashin restructuring reached its culmination in early september this year when the uk court sanctioned a scheme of arrangement promulgated by vinashin, the first example of a vietnamese company going overseas to effect a restructuring. Kpmg acted as financial adviser throughout the restructuring.
Corporate debt restructuring is the reorganization of a companys outstanding obligations, often achieved by reducing the burden of the debts on the company by decreasing the rates paid and. Vinashin to complete debt restructuring in 20 troubled national shipbuilding group vinashin will complete debt restructuring within this year, said vinashin chairman nguyen ngoc su. Corporate debt restructuring definition investopedia. Stateowned enterprises and economic reform in vietnam dtic. Debt restructuring is essentially financial in nature and could involve rescheduling extension of maturities, lower interest rates, debtfor. Debt restructuring modification of the terms of a loan to provide relief to a debtor who could otherwise default on payments. In search of debt restructuring for distressed asian companies in england. Speaking at the quarterly press meeting of the ministry of transport last week, su said debt restructuring is the central task of vinashin s reform. Debt restructuring is essentially financial in nature and could involve rescheduling extension of maturities, lower interest rates, debtforequity swaps, debt forgiveness, indexing of interest payments to earnings, and so on. To date, the debts basically are restricted and the debt restructuring plan will be completed by early 2014, su said. These two debt relief options are used interchangeably and you cannot really blame them for the confusion.
Eisner the walt disney company 500 south buena vista. Debt restructuring is one of several debt relief options people often use to pay off loans or eliminate credit card debt. This debt is already reflected in ppg debt level, but cost of financing could rise if soes default can nonguaranteed soe debt also become a public liability. The minute a debt relief product cant be easily explained in 30 seconds, the more my radar goes off. The use of cacs, exit consent, and term enhancements 434 e. He prov ides training programmes globally to a blue chip client base on private equity, debt finance, loan documentation and restructuring. He is a senior consultant with debt xplained, with grant thornton uk debt advisory and is also a senior advisor to kpmg fi nland. Fine line between debt consolidation and debt restructuring. Nov 29, 2010 moodys investors service, the credit rating agency, has warned that the uncertainty surrounding debt repayment by vinashin, the troubled vietnamese stateowned shipbuilder, is damaging the. Pdf game theory in vietnam sovereign debt negotiation. Recent controversies surrounding sovereign debt restructurings show the. This has created a volatile cocktail which is now being shaken by.
A survey of experiences with emerging market sovereign debt. Sovereign debt restructuring main drivers and mechanism. The following items represent key related tax considerations for private equity funds. Vinashin s strategic important role in the vietnamese shipping industry, the vietnamese government has had significant involvement in the process.
Debt ratio beta cost of equity bond rating interest rate on debt tax rate cost of debt aftertax wacc firm value g 0% 0. Approaches to corporate debt restructuring in the wake of. Restructuring is a complex issue it involves positive and negative aspects, which need to be analysed in order to be able to determine whether it can deliver any added value. So lets look deeper into what all of this is about. Corporate debt restructuring cdr mechanism is a voluntary non statutory mechanism under which financial institutions and banks come together to restructure the debt of companies facing financial difficulties due to internal or external factors, in order to provide timely support to such companies. Debt restructuring battle is brewing over venezuela. Vinashin is an excellent example of the supportive approach of the english courts to the rescue culture, facilitating a restructuring process designed for the benefit of a companys creditors as a whole. The restructuring may involve extending the period of repayment, reducing the total amount owed, or exchanging a portion of the debt for equity in the debtor company. Given our current economic climate and the absence of a formal legal and regulatory framework governing the restructuring process in nigeria, it is now. First scheme of arrangement for a vietnamese company.
Dec 12, 20 after twoandahalf years of negotiations, vinashin had support for a proposed scheme of arrangement under part 26 of the companies act 2006. The globalisation of asian restructuring and the embrace of restructuring tourism is just one chapter in the recent asian restructuring story. The sovereign debt restructuring mechanism sdrm proposed by the im f 420 d. Vinashin was near bankruptcy and planned to cut over half its workforce. He provides training programmes globally to a blue chip client base on private equity, debt finance, loan documentation and restructuring.
Soe restructuring is one of three strategic goals in. Vinashin stays afloat ground breaking english scheme approved for a vietnamese restructuring. This is most likely an option for companies with severe but temporary problems that can demonstrate good longterm prospects, especially where the lender is not a traditional bank. In search of debt restructuring for distressed asian companies in. Debt restructuring financial definition of debt restructuring. As a result of the impact of covid19 on the global economy and capital markets, many businesses are assessing the need to restructure their debt. Also see extension, composition, debtforequity swap. The vinashin restructuring reached its culmination in early.
Su also said in a recent meeting that the debt restructuring process achieved some results. It is general knowledge that many german companies believe german restructuring law not very helpful and prefer to restructure their debts by entering is. The reorganization of the outstanding obligations can be made by any one or more of the following ways. The terms and conditions of the original contracts should remain valid until such time as they are modified by a restructuring agreement. This paper distills lessons from emerging market ems sovereign debt restructuring episodes from the late 1990s following the brady exchange through 2010. Crosscountry experience and policy implications 8 charles w.
Nguyen ngoc su, chairman of the management board of the vietnam shipbuilding industry group vinashin, the group has a feasible plan to restrict its debts and the plan is scheduled to complete in 2014. Vinashin was heavily indebted, and executives have been arrested for mismanagement. Jun 23, 2016 corporate debt restructuring in india 1. Debt consolidation and debt restructuring should be treated as two separate options to solve your debt situation. Calomiris, columbia university, daniela klingebiel, world bank, and luc laeven, international monetary fund coming through in a crisis. Zhang, zinian, in search of debt restructuring for distressed asian companies in england.
Vinashin to complete debt restructuring in 2014 vietnam. Sustainability implies that sovereign debt restructuring workouts are. Pdf game theory, a mathematic approach to analyze strategic interaction, has. In the high court of justice 2012 folio 1462 and 20 folio. In search of debt restructuring for distressed asian. Debt restructuring is essentially financial in nature and could involve rescheduling extension of maturities, lower interest rates, debtforequity swaps, debt forgiveness, indexing of. The past few years have seen rising leverage, the evolution of more complexlaminated structures and the erosion of lender protection in loan documentation. On june 14, deputy prime minister nguyen xuan phuc told the national assembly that vinashin s debts greatly reduced and from 2022, the group would begin paying debts. Corporate debt restructuring can be an important component of economic adjustment programs supported by the imf. Corporate debt restructuring free download as powerpoint presentation.
Vinashins strategic important role in the vietnamese shipping industry, the vietnamese government has had significant involvement in the process. May 02, 2020 corporate debt restructuring suzlon board okays various tools to restructure outstanding debt, bonds dues a company official said the companys outstanding debt is close to rs 12,500 crore, while due bonds are worth usd 172 million. Germany is renowned for handling matters with greatefficiency and success. The 1001 regulations, however, provide a special rule to the effect that for. It is usually less expensive than a bankruptcy would be. A simple majority of lenders holding more than 75 percent of the debt were in favour and, therefore, the requisite majorities required to approve a scheme at a meeting of creditors had been obtained. Rodrigo olivarescaminal, alan kornberg, sarah paterson, john douglas, randall guynn, and dalvinder singh. Jul 09, 2015 zhang, zinian, in search of debt restructuring for distressed asian companies in england. Giddy corporate financial restructuring 15 dear michael, february 11, 2004 mr. This is the first known use of an asian company successfully using an english scheme of arrangement.
According to vinashin s evidence, one complication has been the changing constituency of lenders as a result of trading in the debt by distressed debt investment funds. Preserving value by restructuring debt seven ways to deal with a financial crisis. Unfortunately, a lot of consumers fail to identify the difference between the two. The only book to cover bank, corporate and sovereign restructuring in a single volume. Creating a framework for sovereign debt restructuring that works. Debt restructuring often occurs when a person or company has taken on too much debt and is in danger of bankruptcy. The focus is on the practicalities of dealing with companies in trouble, but also emphasizes technique and methodology, which can be used in any situation. The scheme of arrangement as a debt restructuring tool in. Conference on legal framework for debt restructuring processes.
Vietnam development report 2012 world bank documents. Meaning corporate debt restructuring is basically a mechanism by way of which company endeavors to reorganize its outstanding obligations. The second part of the course, restructuring problem credits, provides an overview of steps available to investors when a company has problems servicing its debt. According to vinashins evidence, one complication has been the changing constituency of lenders as a result of trading in the debt by distressed debt investment funds. Here are some of the most common ways to restructure a loan, starting with the most preferred and going to least preferred, from the banks point of. Benefits and costs of corporate debt restructuring. Debt restructuring is essentially financial in nature and could involve rescheduling extension of maturities, lower interest rates, debtfor equity swaps, debt forgiveness, indexing of interest payments to earnings, and so on. Increasing the tenure of the loan reducing the rate of interest one time settlement conversion of debt. First, z official debt restructurings are more prevalent than private debt restructurings, with evidence of serial defaulting. Debt restructuring typically involves taking a new loan to pay off a variety of creditors. Vietnamese restructuring using an english scheme of. Emerging markets asian restructurings more international.
Moodys warns on vinashin debt problems financial times. As an example, the infamous debt restructuring event of the greek. Apr 09, 2020 corporate debt restructuring is the reorganization of a companys outstanding obligations, often achieved by reducing the burden of the debts on the company by decreasing the rates paid and. Vinashin to complete debt restructuring in 20 vietnam. Second, there are clusters of restructuring events, for instance in 1980s. Debt restructuring considerations for private equity. He is a senior consultant with debt xplained, with grant thor nton uk debt advisory and is also a senior advisor to kpmg finland. The focus is on the practicalities of dealing with companies in trouble, but also emphasizes technique and. Cdr definition corporate debt restructuring is basically a mechanism by way of which company endeavors to reorganize its outstanding obligations. Corporate debt restructuring in india linkedin slideshare. Advanced debt restructuring 2day course course overview. It focuses on the role played by the nature of debt contracts and restructuring schemes on the restructuring outcomes. Moodys investors service, the credit rating agency, has warned that the uncertainty surrounding debt repayment by vinashin, the troubled vietnamese state. Thats exactly what happened when i started looking more closely into the debt restructuring solution that is being promoted more and more.
Private debt restructuring may be needed to revive medium term productivity and growth, thereby supporting a countrys balance of payments adjustment. Restructuring the trainer is a consultant, public speaker and author. Jul 12, 20 to date, the debts basically are restricted and the debt restructuring plan will be completed by early 2014, su said. On june 14, deputy prime minister nguyen xuan phuc told the national assembly that vinashins debts greatly reduced and from 2022, the group would begin paying debts. Full analysis of the financial crisis and resulting litigation and regulation. Debt restructuring is a process that allows a private or public company or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts to improve or restore liquidity so that it can continue its operations replacement of old debt by new debt when not under financial distress is called refinancing. Some notes on class actions in the sovereign debt context 448. Corporate debt restructuring cdr is an effective financial tool for minimizing the ad. This paper assesses the debt restructuring mechanisms available to companies in english law, compares these mechanisms with the chapter 11 procedure in the us, and makes some suggestions for reform of the english system in this context.