The process whereby a private or public entity or a sovereign (a country), facing insolvency (cash flow problems and financial distress), can renegotiate with the creditor the terms of its debts, immediately falling due. The creditor provides concessions in terms of reducing the debtor’s payments so that the latter can restore its ability to continue its operations and service the debt.

A debt restructuring is usually implemented in stages, commencing with a standstill agreement (between the two parties involved, aiming to stabilize the borrower). Next, valuations (due diligence, information gathering, business plans, etc.) are carried out in order to ensure that the process will lead to a viable standing of the borrower. Last step involves conclusion of the restructuring agreement towards implementation as per the plans set.