What is debt restructuring in the company?


The entrepreneur’s debt may lead to the liquidation of the company. To avoid this, in many cases, you can take steps to restructure your debts.


Debt repair

Debt repair

Explaining the concept of debt restructuring, the easiest way to say is that it is a kind of repair of the unfavorable financial situation in which our company found itself. It involves changing the terms of repayment of financial liabilities in such a way that the debtor has enough time to initiate actions to improve the financial condition of the company, but without leaving any arrears in current payments.


For the benefit of creditors

For the benefit of creditors

If a company gets into financial trouble, it stops paying its liabilities. Its creditors suffer because they do not recover their debts on time. As a result, they too may lose their liquidity. Therefore, restructuring the debtor’s debt from their perspective will also be the most advantageous situation, because creditors can in a relatively short time, without the need for debt collectors, get their money back.


Debt restructuring brings many benefits for the debtors themselves, including:

  • avoiding entering into the Register of Debtors kept in the country,
  • avoiding deterioration of financial liquidity or its loss,
  • maintaining a positive image of the company in the eyes of customers and contractors.

How to restructure your debt?

How to restructure your debt?

There are many ways to restructure your debts. The most popular are:


Borrowing a restructuring loan – it allows you to pay back previous loans and advances in which the client is late paying further installments.


Credit holidays – most often they relate to debts that the entrepreneur has in the bank where he took out the loan . He can apply for suspension of principal, interest or both installments for several months. It is important that with the suspension of only the repayment of credit capital, interest will still have to be paid within the dates indicated by the bank . Such restructuring is recommended for those debtors who know that the deterioration of their financial situation is only temporary.


Extending the repayment period – you can negotiate with your creditors that the debt will be repaid at a later date. In order for creditors to agree to such a solution, it is usually required to repay at least part of the debt.

Change of collateral – in some cases, if there is a solid justification for this, you can ask your creditors to sell a collateral for a tangible liability.


Regardless of which path of debt restructuring the entrepreneur chooses, one should courageously commence such work and take responsibility for the emergence of debt.

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