Negotiating Resolution Terms: A Deeper Dive

 

Negotiating Resolution Terms: A Deeper Dive

During the CIRP, the debtor and creditors engage in intense negotiations, especially if the debtor has significant operational creditors. These negotiations often revolve around:

• Amount to be Paid: Whether operational creditors should receive full dues or a reduced amount.

• Payment Terms: How much should be paid upfront versus deferred payments, especially in the case of financial creditors.

• Business Continuity: Operational creditors often influence the terms based on the belief that they will continue to provide goods or services to the debtor post-restructure.

Successful negotiation strategies might include:

• Offering equity in the restructured company to creditors as part of the repayment.

• Moratorium periods for financial creditors, where the debtor can delay interest payments to stabilize operations.

• For operational creditors, ensuring that future business opportunities are considered as part of the resolution, ensuring long-term relations.