Debt Restructuring Advisory

Debt restructuring outside the NCLT/IBC route is governed by the Reserve Bank of India's Prudential Framework for Resolution of Stressed Assets, issued vide circular RBI/2018-19/203 (DBR.No.BP.BC.45/21.04.048/2018-19) dated 7 June 2019, in supersession of RBI's earlier 12 February 2018 circular on the same subject (which the Supreme Court struck down on 2 April 2019 for mandating a universal, time-bound IBC reference beyond RBI's rule-making powers).

The June 2019 framework applies to Scheduled Commercial Banks, Small Finance Banks, and All-India Term Financial Institutions, and rests on three principles: early recognition and reporting of borrower default (including through Special Mention Account classification at the first sign of stress), complete discretion for lenders in designing and implementing a resolution plan (rather than a mandatory, prescribed process), and a disincentive structure of additional provisioning where lenders delay implementing a resolution plan or fail to initiate insolvency proceedings after a plan fails.

Its operative timeline has two components: a 30-day Review Period beginning on the date of default, during which lenders must decide on a resolution strategy (regularisation of the account, restructuring outside IBC, sale of the exposure, or change in ownership), followed by a Resolution Period — typically 180 days — for implementing the chosen plan; failure to implement within this window triggers the additional-provisioning consequences under the framework. This lender-led, RBI-supervised route is distinct from the NCLT-driven Corporate Insolvency Resolution Process under Sections 7/9/10 of the Insolvency and Bankruptcy Code, 2016, and is generally the first-recourse mechanism explored before an IBC filing is considered. Our debt restructuring advisory is scoped to structure and negotiate resolution plans within this RBI framework, including the Review Period and provisioning-timeline discipline it imposes on lenders.

Debt restructuring is the negotiated rearrangement of a company's borrowings — extending tenures, reducing instalments, converting debt into equity or settling for less — to restore the company to a position where it can service what it owes. The formal framework is the RBI's Prudential Framework for Resolution of Stressed Assets (the RBI's June 2019 circular, VERIFY: the current circular number), under which lenders agree resolution plans for stressed borrowers, and the Insolvency and Bankruptcy Code 2016 provides the statutory backstop. One-time settlements with banks are the out-of-court variant, negotiated directly with the lender.

The earlier a company restructures, the more options it has. A borrower that approaches the bank with a credible plan — cash flow projections, a cure for the default, security enhancement — can negotiate a package that keeps the business alive; one that waits until the account is classified and the pressure is on faces far fewer options, including the creditor's right to initiate proceedings under Sections 7 or 9 of the IBC 2016.

The cost of not restructuring is that the default decides the outcome. Interest keeps compounding, the account's classification deteriorates, the company's ability to borrow anywhere collapses, and the bank's own resolution machinery takes over the decision. A company that stays passive through a genuine stress cycle typically loses control of its own debt story.

This service is for companies under debt stress — banks' classification actions, defaulted facilities, or simply a debt load the business cannot service. We prepare the restructuring plan with the cash flow model, negotiate the one-time settlement or the resolution package with the lenders, structure the conversion or sacrifice positions, and manage the documentation through to the agreed terms.