RESTRUCTURING DEBT DATA

Restructuring Debt Data

Restructuring Debt Data

Introduction

Restructuring of debt is the process that occurs when a debtor is unable to pay its commitments or when both parties for various reasons, prefer to change the terms of the debt previously agreed. As in many cases it is possible or not convenient to run the debt-topping. Therefore this process is also called, often renegotiated. The same is especially common when the Debtor is a country or a large corporation: in this case it is sought to be placed in a better position to pay, either increasing your income or looking for more accessible terms for payment.

Restructuring almost always includes the modification of the maturity, causing it to remove the accumulation of debt in the short term and become consolidated these into long-term debt, the rescheduling of debt, or the change in annual amounts to pay, so they are more uniform or gradual, the change in interest and other similar clauses. It is also sometimes come to refinance debt previously contracted, which is to issue new loans, on terms more accessible to those who are paid above. In that case, when the debtor is in a critical financial situation, may also be established so-called grace periods, periods in which the debtor has time to recover before starting the new loan payments under the contract. Grace periods usually mean that during that time, no payments will be made ??to Capital but only interests.

Analysis

In the current scenario, the given balance sheet is given below, in which total liabilities are greater than the total assets, which is not a good situation for a company. In this case, no investor is going to invest in this company because the company does not have the financial credibility. When total liabilities are greater than total assets then the firm cannot borrow more money against its assets, it does not have any leverage.

Company Information

Assets

Current Assets

Cash and cash equivalents

$ 108,340

Trade accounts receivable, net of allowances

2,866,260

Other receivables

62,150

Operating supplies, at lower of average cost or market

58,630

Prepaid expenses

446,050

Total Current Assets

3,541,430

Property, Plant, And Equipment (at cost)

Land

1,950,000

Buildings and improvements

2,327,410

Equipment

5,015,660

Other equipment and leasehold improvements

1,645,580

Total

10,938,650

Accumulated depreciation and amortization

(7,644,430)

Net Property, Plant, and Equipment

3,294,220

Other Assets

Deposits and other assets

1,000,080

Total Assets $ 7,835,730

Liabilities and shareholders' equity (deficit)

Current Liabilities Accounts payable $ 972,160

Accrued liabilities

2,071,270

Accrued claims costs

793,620

Federal and other income taxes

19,710

Deferred income taxes

500

Current maturities of long-term debt and capital lease obligations

50,610

Short-term borrowings

249,250

Total Current Liabilities

4,157,120

Long-Term Liabilities Capital lease obligation

54,580

Note outstanding

3,000,000

Mortgage outstanding

608,030

Other liabilities

95,860

Total long-term liabilities

3,758,470

Total Liabilities

7,915,590

Shareholders' Equity (Deficit) Common stock, $.01 par value; authorized 500,000 shares; issued 231,000 shares

2,310

Additional paid-in capital

731,090

Accumulated other comprehensive loss

(113,500)

Retained earnings (deficit)

(639,180)

Treasury stock (60,580)

Total Shareholders' Equity (Deficit) (79,860)

Total Liabilities And Shareholders' Equity

$ 7,835,730

Financial Analysis

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