Debt-for-Equity Swaps

The principal element of any debt-for-equity swap is a restructuring of the balance sheet of a corporate debtor so that the relevant participating creditors (mainly financial creditors) receive equity interests in a reorganised capital structure in consideration for reducing their debt claims against the company.

In its simplest form, it may be a route by which a company can avoid an imminent or prospective insolvent liquidation caused by prolonged negative cash flows and/or balance-sheet solvency issues.  Equally a debt-for-equity swap offers creditors a stake, possibly a controlling stake in the business when there is no perceivable advantage in forcing a company into a formal insolvency procedure.

Our specialist business restructuring team can help with planning and implementing the most effective debt-for-equity swap options.