It is common to see ups and downs in business. The recent pandemic crisis and extended lockdown measures caused a serious impact on the economy worldwide. People are still confused about how to settle in to this new normal. Businesses are experiencing complicated situations due to a lack of finances and cash flows. They need to find relevant sources for funding ongoing operations and future activities.
The coronavirus pandemic has made it difficult for businesses to return to the normal phase due to enhanced financial burden, lack of sales, and limited access to raw materials and labor. Well, in this scenario, financial restructuring services can help you to recover from the crisis. It is possible for businesses to grab some expansion opportunities in the competitive market. If they find a way to convert debts into equity, financial restructuring services can help you to avail desired outcomes.
The Singapore government has recently set up new regulations to support businesses. Businesses can find new ways to handle financial difficulties with sustainable and reliable solutions. When you swap debt for equity, it involves the conversion of owed debt into equity of the company. For creditors, the debt for equity is one of the most reliable ways to avoid the cost associated with carrying out various processes.
Financial restructuring advisory states that it may also open doors for future growth in the current environment.
Debt for equity can be utilized in various situations such as:
- Restructure company debt with the non-bank creditor.
- Change debt proportion and equity that is held by company shareholders to improve the balance sheet.
- Creating a strategic alliance with suppliers at your business platform may assist in financial restructuring services.
No matter what kind of circumstances you are facing in the market, debt for equity swapping may provide new opportunities for your business to grow. In order to achieve desired outcomes, it is first important to plan engagement with the company shareholders as well as creditors to undertake debt to equity swapping activity successfully. In general, the non-statutory debt for equity swapping is done between participating creditors and the company; it can be flexible and simple as well. In this process, the company plays a lead role by preparing relevant documents as well as by negotiating with the involved parties. They may also need to care about shareholder agreements, share issues, and debt forgiveness.
In general, debt-equity swaps are implemented using some trustworthy statutory procedures. The process and cost are mainly handled by an experienced financial restructuring advisory in the country. They may need consent and approvals from all shareholders. At the same time, it is important to do adequate accounting and tax treatment for swapping. The swapping process can ultimately improve the balance sheet of the company while increasing the funds of the shareholders. The involved parties may need to agree on various commercial points to ensure adequate conversion. Note that the conversion is usually an immediate concern for the businesses; therefore, timing cannot be negotiated. It is important for involved parties to show active involvement in the process and to prepare all relevant documents.