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Practical aspects of restructuring - Coggle Diagram
Practical aspects of restructuring
why to restructure
worst of pandemic is not over yet
shift of investors focus to equity markets
banks credit growth to remain impacts
cash flow challenges
sustainability
IBC moratorium
Challenges on liquidation of collateral assets
COVID impact on industries
Rationale for restructuring
SC orders for freezing NPA recognition
proactive RBI regulations for restructuring under various scenarios
5-8% of total debt folios are expected to get restructured
60% of mid sized firms are eligible under COVID related restructuring scheme
significant hair cuts in recovery of ineligible borrowers
Rated company eligibility scenario
sector specific attributes
Approaching Lenders
Impact on business cash flows
disruption in working capital cycles
one time losses due to fixed costs
eligibilities under various resolution framework
promoter abilities to fund losses or bring additional equity
Status of loans as on 01/03/2020
wholistic approach in multiple or consortium banking
Housekeeping issues
forensic audit
cash flow diversions
security dilutions
valuations
related party transactions
shareholding changes
outside bank debt (unsecured or trade payables)
directorship changes
Past escrow arrangements
Additional fund requirements
appraisal challenges
Managing timelines as per resolution framework
Parallel appraisals under multiple or consortium banking
accommodative approach
borrower track record
Demonstration of cash flow mismatch
achievement of objective criteria or resolution framework criteria
hair cuts
RP rating
timelines for upgradation of loan account
Provisioning required