Jersey continues to be the offshore jurisdiction of choice for
restructurings involving debt for equity swaps (particularly
restructurings of UK and international corporate groups). But
what makes Jersey so attractive for these type of transactions?
Why use debt for equity swaps?
A borrower group that is overleveraged and in financial
difficulty, but ultimately deemed to be a viable going concern,
might be suited to a debt for equity swap. This involves
restructuring both the borrower's debts and capital structure.
Creditors (which may comprise banks, bondholders or other types of
creditor) may find a debt for equity swap appealing if faced with
the alternative of seeking to recover existing debt, particularly
if that might lead to insolvency.
