How Can an Enterprise Restructure Its Debt to Remain in Business – Restructuring Advisory Group

debt restructuring

In spite of having good business plans and robust management in place, many business concerns and enterprises face tough times due to unforeseen events such as natural calamities, undesirable change in business environment, or issues with suppliers.

Irrespective of the difficulties, cash strapped business concerns and enterprises are required to pay back their dues to their creditors or they will eventually be forced to sell their assets to pay their creditors that will result in the end of their operations.

To remain in business, enterprises need to do these following things:

Identifying the issues

In case any business concern is unable to pay its creditors’ dues, it may have a grave cash flow issues which can be result of:

Undercapitalization: the business concern is carrying a heavy debt burden than it can bear.

Irregular payments: the business concern is receiving payments irregularly for its sales.

Low or inadequate sales: the business concern is not making the adequate sales to meet its expenditure.

Restructuring debt

In these cases, the enterprise can seriously consider restructuring its debts by seeking the help of its creditors. The business concern can also utilize a debt restructuring service to design a strategy that could help it to get out of debt.

Enterprises having a debt of a minimum of $15,000, at least four creditors, and have the ability of pay a minimum sum of $1,000 per month can avail a debt restructuring service.

If some creditors are not comfortable with the direct proposals of an enterprise, they may be keen to work through a commercial debt restructuring company.

Business debt versus individual debt

Individuals who are troubled by rising personal debts can seek the help of any credit counseling services (most of these counseling services are nonprofit agencies), make repayment strategies, and approach creditors to agree on mutual terms and conditions. However, business concerns can’t get out of their debts by seeking help of any nonprofit entities. They need to get the help of some reputed debt restructuring firms.

The debt restructuring firms can offer help to cash strapped small enterprises and create plans that is feasible for debtors and reasonable for creditors.

Advantages of Debt Restructuring

With the help of a repayment plan, a heavily indebted enterprise can prevent liquidation and maintain its business operations.

A debt restructuring firm directly handles a troubled company’s creditors, their attorneys, and collection agencies.

A debt restructuring firm saves time and energy of an enterprise and helps it to focus its resources on its business operations.

A debt restructuring firm induces a company to adhere to a strict repayment schedule and this affect the business concern’s credit rating positively.

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