Terms Of A Loan – Set In Stone?

The issue.

As an attorney working in restructuring, I hear a recurring complaint from bank's restructuring departments: "Debtors admit financial difficulties far too late. They ring the alarm bell only once the entire house is on fire."

Doubtless, there are many reasons for this, ranging from the unwillingness to accept the facts, to the conviction that the troubles can best be managed internally. Yet one main obstacle is the lack of adequate proceedings to restructure debt outside of judicial insolvency proceedings. In most jurisdictions covered by Schoenherr, the only way for a solvent restructuring is out of court negotiations and the consent of all relevant creditors. There have been success stories but still, out of court restructurings face serious challenges, not at least the necessity of a unanimous agreement for all involved creditors.