Corporate Debt Restructuring: An Evaluation Dr. Jessica V. Mary Associate Professor, School of Management Studies, University of Hyderabad, Hyderabad Online published on 17 August, 2013. Abstract Businesses obtain funds for capital acquisitions as well as for daily operations. However, some times the borrowers may find themselves unable to meet their financial commitments, and may become ‘financially distressed’. In such circumstances, the companies face tough times, and may even face liquidation. In order to pre-empt liquidation of the company, the borrowers seek to renegotiate with their lenders regarding modification of the terms of the loan. This action of the corporate leads to what is popularly called ‘debt recast’ or ‘debt workout’ or ‘corporate debt restructuring.’. Statistics suggest about 85 per cent of the loan restructuring cases referred to corporate debt restructuring (CDR) cells are able to meet their obligations. And, almost 45 per cent of these cases (or four of every 10) are successfully revived. Nevertheless, more number of companies goin for CDR does not augur well for the banks and the economy. It is said that 10–15% of the restructured loans turn bad for most banks. This paper aims to look into Corporate Debt Restructuring(CDR), the concept, the rationale and need for CDR, the status of CDR in India, and suggests measures that can be taken up to obviate the need for CDR in the first place. Top Keywords Financial Distress, Debt-workout, Contagion, Non-performing Assets, Corporate Debt Restructuring. Top |