The need for a corporate debt restructuring often arises when a company is going through severe financial crisis and is having difficulty in meeting its obligations to its lenders. If the condition of the company threatens its existence, it can negotiate with its creditors to reduce these burdens and increase its chances of avoiding bankruptcy. In the U.S., the synonymous Law is Chapter 11 proceedings which allow a company to get protection from creditors with the hope of renegotiating the terms on the debt agreements and survive as a going concern.

The reorganization of a company's outstanding obligations are often achieved by reducing the burden of the debts on the company by, in turn, decreasing the interest rates payable on the loan and increasing the time within which the company has to pay up its obligation back to the lenders. This allows a company to increase its ability to meet its obligations as also some debt may be forgiven by creditors in exchange for equity in the company or other arrangements with the company and its promoters.

We are proud to say that our Firm is one of the pioneers in advising over the CDR for two of the major steel barons of India.

The services offered by us include:

  • Understanding and assessing the client’s business model and future plans
  • Advising on the overall restructuring plan
  • Preparing and reviewing relevant documents required by the lenders to consider the restructuring plan, to ensure that the package conforms to the CDR Guidelines
  • Analysing and reviewing existing debt and security documentation so as to prepare the borrower for negotiations or possible litigation;
  • Segregating CDR lenders and non-CDR lenders and accordingly strategising the fortification of the company (the borrower) against plausible actions by non-CDR lenders;
  • Advising on the CDR process and coordinating with all parties involved in the CDR proposal;
  • Reviewing preliminary applications for initiating the CDR process including correspondence with regulatory authorities, banks/financial institutions and their advisors;
  • Advising the borrower on possible legal proceedings initiated or to be initiated by the lenders;
  • Defending legal proceedings initiated by lenders before Debt Recovery Tribunal (DRT), court or arbitration;
  • Drafting/ reviewing CDR documents such as (a) master restructuring agreement in relation to CDR proposal; (b) trust and retention account agreement; (c) personal guarantees; (d) pledge agreement; (e) indenture of mortgage/ memorandum of entry and director's declaration; (f) inter-creditor agreement; (g) security trustee agreement etc.;
  • Drafting and reviewing other ancillary documents such as corporate approvals, third party authorizations/ consents, undertakings, indemnities, etc.
  • Interfacing and negotiating with lenders at all levels and the CDR Cell to obtain a viable restructured financial package;
  • Assisting in implementation of CDR package by coordinating with all lenders,
  • Assisting during loan documentation to seek disbursements, if any;
  • Considering and advising on alternative methods of restructuring under the Scheme of Arrangement under Sections 391-394 of the Companies Act.