FRAMEWORK OF DISTRESSED DEBT-FOR-EQUITY SWAP

Abstract

The scheme for restructuring distressed debt by its conversion into equity of borrower provides many advantages for lenders and enterprises, but in Ukraine it is most suitable tool for large corporations and some banks that belong to industrial-financial groups or find investors interested in the following re-sale. A prerequisite for the use of debt-for-equity is the acceptance by the bank of critical asset of the borrower or a significant stake of shares. The debt-for-equity is an attractive alternative to bankruptcy for companies. The acquisition of the status of the owner requires from the bank to comply with advanced standards of corporate governance.