Description

Although the early identification of signs of distress is very important in the restructuring process, it is crucial to be aware that actual restructuring may only be required when certain events happen. These are referred to as “restructuring triggers” and are the key focus of this module.

Learning Objectives

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1. Identify the major restructuring triggers, including covenant breaches, nonpayment of loan liabilities, and cross default provisions.
2. Analyze the implications of failing the cash flow test and balance sheet test in determining a company's insolvency.
3. Evaluate the impact of covenant breaches on a company's financial health and the potential responses from lenders.
4. Compare the cash flow test and balance sheet test to understand their differences and applications in insolvency assessments.
5. Interpret the significance of cross default provisions and how they can trigger defaults on multiple loan facilities.