Businesses need to go for debt restructuring to reduce the risk of financial distress in the company. It is also possible to handle the risk of default with this method. When companies follow a debt restructuring approach, they can find better ways to reduce interest rates as well. In simple words, Singapore debt restructuring can help businesses to find some trusted ways to survive in the hour of crisis.
How does Singapore debt restructuring work?
Companies look for Singapore debt restructuring options when they are on the verge of bankruptcy. The main goal is to reduce interest rates of pending loans and debts by a certain level that can ensure an adequate flow of money in the company. When businesses opt for this approach, it helps them to pay off existing liabilities on time. The process looks more appealing to both parties, including lenders and businesses as well. On one side, where the company regains its business potential, the creditors are also able to get some returns in comparison to scenarios in which the company may face bankruptcy.
Singapore debt restructuring methods
There are generally three commonly used methods for Singapore debt restructuring:
- Debt for equity swap
This method can be used by a company when it is at the bankruptcy stage. Under this procedure, the lender accepts some reasonable adjustments for the pending debt with equity of the company. This kind of financial adjustment can be a good choice when the company is experiencing some serious financial disturbances. The creditors can take enhanced control of businesses in such scenarios. Note that this option is recommended by experts at corporate restructuring Singapore only when a company has significant assets with a well-established business.
- Bondholder haircuts
Here comes another type of debt handling procedure which is almost the same as debt for equity swap. The idea is to present a lower interest rate in comparison to normal market rates for some assets that can be used as collateral. It can also act as a cushion for the loan. Bondholder haircuts allow an efficient reduction in interest rates so that bondholders get an opportunity to invest more in securities.
- Informal debt repayment agreement
This is an informal type of debt repayment agreement according to which if the defendants are not able to make full payment to the enforcement officer, they can set up a new contract for some reasonable installments. This type of settlement is highly dependent on the enforcement officers and the creditors. It is better to ensure that defendants do not agree to pay more than what they can actually afford as an instalment. It is possible to find plenty of reliable methods to handle pending debts at your business terminal. Singapore’s government has developed many new rules and regulations to ease the transactions between both parties. Companies need to take help from some experienced corporate restructuring Singapore experts to avail desired outcomes. They can help you better to solve liquidity problems at the growth stage of the company.