A standstill agreement is a contract that contains provisions that govern a bidder of a company.
But chaebols’ practice of investing in size without regard to profitability not only failed to promote economic growth but harmed economic soundness through stockpiles of excess inventory and problems in recovering invested funds. If the firm is doing very well, and lenders feel that the return on investment will likely be better with equity positions, this becomes an attractive option for debt holders. It is deemed beneficial to let the company continue to operate as a going concern and allow the creditors to be involved in its operations. This can mean that the original shareholder base will have a significantly diluted or diminished stake in the company.
Ghana’s debt restructuring under the common framework aims to include non-Paris club members, such as China in debt relief talks. China is Ghana’s biggest bilateral creditor with $1.7 billion of debt, while the country owes $1.9 billion to Paris club members, according to data from the International Institute of Finance . EY Financial Consulting professionals provide out-of-court financial restructuring services to companies, creditors, investors and other stakeholders globally to preserve and help optimize value.
A nation seeking to restructure its debt might move the debt from the private sector to public sector institutions. Carol M. Kopp edits features on a wide range of subjects for Investopedia, including investing, personal finance, retirement planning, taxes, business management, and career development. Zambia’s government said in October it needs a present value debt reduction by 2027 of $6.3 billion, or 49% of the debt being restructured, to meet IMF targets, a level some international bondholders have previously said would be unacceptable.
What Is Debt Restructuring?
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Browse 債務舒緩 of real-time and historical market data and insights from worldwide sources and experts. Ghana, which secured a $3 billion staff-level agreement with the International Monetary Fund in mid-December, has been hesitating on this request due to the long delays faced by other countries using the process. The request came as part of a virtual presentation by Ghana’s finance ministry hosted under the auspices of the group of creditor nations known as the Paris Club, the source added. LONDON/ACCRA, Jan Ghana requested on Tuesday to restructure its bilateral debt under the common framework platform supported by the Group of 20 major economies, a source familiar with the situation told Reuters. A mistrust of politicians is representative of the postwar spirit in Europe where democracy, wealth, and prosperity have been used as being synonymous—which they are not.
PAGBAM advises Trafigura PTE LTD on the judicial restructuring of Roch S.A.’s debt
Withstanding all such approval, a business or individual can continue operating as normal; otherwise, a business or individual is obliged to proceed into bankruptcy filing. Debt restructuring is a process used by companies, individuals, and even countries to avoid the risk of defaulting on their existing debts, such as by negotiating lower interest rates. Debt restructuring provides a less expensive alternative to bankruptcy when a debtor is in financial turmoil, and it can work to the benefit of both borrower and lender. The Common Framework is a partnership between the G20 and the Paris Club that sought to restructure sovereign debt, grounded in traditional Paris Club terms . This framework allows creditor countries to negotiate together with DSSI-eligible debtor countries on debt treatment.