Informal restructuring tools

Process

The key stages of a restructuring are usually:

1. •

   stabilise the company (agree a standstill—see Practice Note: Key elements of a standstill agreement and Precedent: Standstill Agreement)

2. •

   prepare for the restructuring (conduct due diligence, review the business plan and obtain a valuation—see Practice Note: Types of valuation for R&I lawyers)

3. •

   implement the restructuring (sign and implement the restructuring agreement—see Precedent: Restructuring agreement)

For further details, see Practice Note: Restructuring process.

Options

Restructurings typically implement one or more of the following techniques:

1. •

   covenant waiver or reset (probably the least extreme form of restructuring—see Practice Note: Covenant waivers and resets)

2. •

   debt restructuring (also calms directors by strengthening the balance sheet and addresses any serious loss of share capital issues—see Practice Note: Debt waivers, extending maturity and debt rescheduling)

3. •

   debt for equity swap (see Practice Note: Debt for equity swaps)

4. •

   transfer to Newco (see Practice Note: Transfer to Newco)

5. •

   enforcing