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.

How does debt restructuring work?

The debt restructuring process typically involves getting lenders to agree to reduce the interest rates on loans, extend the dates when the company's liabilities are due to be paid, or both. ... Creditors understand that they would receive even less should the company be forced into bankruptcy or liquidation.

What does restructuring your debt mean?

Debt refinancing is when you replace your existing debt with a new debt that has more favourable terms and lower monthly repayments. ... If your application is successful and you're able to refinance your home at a lower interest rate, you could end up saving a significant amount over the life of the loan.