If your business is experiencing serious financial problems, debt restructuring can be a better solution than bankruptcy. The main reason for this is that while bankruptcy includes the risk that your company may not survive, a good debt restructuring plan will lessen this risk. If you do not want to be in the position of giving up your business entirely over your financial difficulties, debt restructuring may be the answer for you.
The purpose of debt restructuring is to deal with your company’s debt and improve its financial state with the least amount of risk to your business. These are options which you would not have if you were to simply file for bankruptcy. Not only can debt restructuring help you to preserve your business, it will also give your business a better chance to resolve its debt and become more financially sound for the future.
There are a number of different possibilities for debt restructuring. One option is if your creditors agree to either extend the length of time in which you can make your payments, or to reduce the amount of your total debt. Whether you will be paying less, or having a longer period of time to pay it, this option can greatly assist you with your financial burden.
Another option is for your creditors to accept shares in your business in order to reduce or eliminate the debt your company owes to them. While one benefit of this method is that when your creditors share in your business they may be more willing to keep it sustainable, it is also wise to consider how much authority you want your creditors to have in your company. The decision regarding creditors holding assets to your company should be considered from both of these standpoints. It should be based on both your company’s current needs and your vision for its future.
In most cases, debt restructuring is preferable to bankruptcy. Regardless of which particular debt restructuring plan is most reasonable for your company’s specific needs, it will give your business the chance to become financially stable, and you will have the lowest risk of needing to deal with creditors who are unwilling to be cooperative. Although each business differs in its specific needs, a good debt restructuring plan is generally the best option. Your consultation will help you to decide if this is the method that is best suited to your company in the long-run.