DEBT VALUATION SOLUTION FOR EFFECTIVE DEBT RESTRUCTURING

In the context of economic fluctuations and increasing financial pressure, debt restructuring has become a vital solution to help businesses and individuals overcome financial difficulties. This process involves adjusting loan terms, repayment periods or interest rates to enhance the borrower’s repayment capacity while reducing risks for lenders. Debt restructuring not only serves financial purposes but also plays a crucial role in maintaining economic stability and sustainable development.

What is debt restructuring? Is it the same as debt restructuring strategy?

Debt restructuring is the process of modifying loan terms to reduce financial burdens and ensure the borrower’s ability to repay under difficult economic conditions. It is a widely applied solution not only for businesses but also for public and bank-related debts.

Common forms of debt restructuring:

1. Debt restructuring strategy: Adjusting repayment schedules or interest rates.

2. Loan restructuring: Renegotiating loan contracts, extending repayment periods.

3. Public debt restructuring: Governmental adjustment of national repayment plans to maintain economic stability.

4. Bank debt restructuring: Banks negotiating with clients to ease financial pressure.

Many people confuse "debt restructuring" with "debt restructuring strategy." Although related, these two terms are not completely synonymous:

• Debt restructuring: focuses on modifying the terms of existing loans to help businesses or individuals avoid default. It may involve extending repayment periods, reducing interest rates, or changing repayment methods.

• Debt restructuring strategy: has a broader scope. It often involves restructuring the entire financial framework of a business, including asset sales to reduce debt, issuing new shares, converting debt into equity, or merging debts to improve financial health.

Key benefits of debt restructuring for businesses

Debt restructuring provides more than just operational continuity - it delivers significant benefits:

1. Reduce financial stress: Adjusted loans give businesses time and resources to recover.

2. Optimize cash flow: Helps maintain liquidity for stable operations.

3. Preserve credit reputation: Prevents downgrade to bad debt, maintaining future loan access.

4. Boost reinvestment opportunities: Frees up capital for business expansion and growth.

Bank debt restructuring: Trends and solutions

Banks today offer various debt restructuring solutions for businesses, such as:

• Debt extension/rescheduling: Extending repayment periods to ease financial strain.

• Interest rate adjustment: Some banks offer reduced interest rates for struggling clients.

• Refinancing: Banks may consider providing new loans to help businesses reinvest or rotate capital.

According to the State Bank of Vietnam, by early 2024, more than 500,000 businesses had their debts restructured, allowing them to maintain production and business activities.

Public debt restructuring: A macroeconomic challenge

Beyond businesses, public debt restructuring is a critical concern for national economic health. Vietnam is currently applying effective public debt management measures, including:

• Extending loan maturity to ease short-term repayment pressure.

• Diversifying funding sources, leveraging preferential loans from international financial institutions.

• Strict control of new borrowings to avoid budget imbalances.

These measures help stabilize national finances and foster a sustainable investment environment.

Debt valuation by SunValue – Optimal debt restructuring support for businesses

Debt valuation plays a vital role in bank debt restructuring. It helps businesses determine the true value of loans, forming a reliable basis for negotiations with credit institutions. According to debt restructuring regulations, valuation must be accurate, objective and legally compliant.

Key benefits of debt valuation:

• Determine true debt value: Provides accurate data for effective negotiation.

• Enhance Transparency: Enables both businesses and banks to assess repayment capacity properly.

• Support decision-making: Supplies crucial insights for developing effective restructuring strategies.

When a business faces financial difficulty and seeks to restructure debt, partnering with a reputable valuation firm optimizes the process and protects financial interests. Indochina International Appraisal & Investment JSC (SunValue) offers professional debt valuation services with standout advantages:

• Leading experts: A team with years of experience in valuation and financial consulting.

• Transparent valuation process: Fully compliant with current laws on debt restructuring.

• Detailed and accurate reports: Reliable data for bank negotiations and strategic planning.

⋙ Many businesses have successfully restructured public debt through our valuation services. Contact us today for a free consultation!

Indochina International Appraisal & Investment JSC (SunValue)

• Address: Indochina International Appraisal System

• Hotline/Zalo: 081 519 8877

• Website: inavn.vn

• Email: contact@sunvalue.vn

• Facebook: Indochina International Appraisal and Investment

Conclusion

Debt restructuring not only helps businesses navigate financial hardship but also lays the foundation for long-term sustainable growth. Understanding what debt restructuring is, following the regulatory framework and choosing a trusted valuation partner like SunValue empowers businesses with a more effective financial strategy.

If you’re looking for optimal solutions for bank or public debt restructuring, don’t hesitate to contact Indochina International Appraisal for professional support and tailored guidance.