Recapitalisations

Published by a ��Ƶ Restructuring & Insolvency expert

Practice notes

Recapitalisations

Published by a ��Ƶ Restructuring & Insolvency expert

Practice notes

The term 'recapitalisation' refers to a company changing the proportions of its debt and equity, something which can be achieved in a variety of ways. In some cases the company undertaking a recapitalisation will be distressed and be looking to make its outstanding debt burden more manageable or inject new money for liquidity purposes, but a solvent company may also consider one.

This Practice Note examines some of the reasons a company (solvent or otherwise) might recapitalise and the circumstances in which one recapitalisation method might be favourable over another. In addition, the Practice Note covers some of the key documents and considerations which could be involved.

Types of recapitalisation

A recapitalisation can encompass the injection of new money, a debt for equity swap or a simple write-down of debt, amongst other things. Recapitalisations often combine two or more of the methods described below, sometimes including a reduction of capital, a scheme of arrangement and/or a pre-pack administration.

Common types of recapitalisation include:

Debt for equity swap

In the case of a distressed company, a creditor may be unwilling to simply

Jurisdiction(s):

United Kingdom

Key definition:

Recapitalisation definition

What does Recapitalisation mean?

A company changing the proportions of debt and equity in its capital structure. Usually the debt will be replaced by equity or vice versa.

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