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Corporate Debt Restructuring (CDR)

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CDR was instituted by Reserve Bank of India (RBI), National Central bank of India in August 2001 as a voluntary mechanism to reorganize outstanding debt obligations.
The reorganization of the debt can be made by the following ways:
 Increasing the tenure of the loan
 Reducing the rate of interest
 One time settlement
 Conversion of debt into equity
 Converting un-serviced portion of interest into term loan
It has been a successful instrument allowing corporates to return to profitability for benefit of all stakeholders involved.

Publié dans : Économie & finance
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Corporate Debt Restructuring (CDR)

  1. 1. Brief overview of Corporate Debt Restructuring (CDR) October 20121
  2. 2. What is CDR mechanism?• Instituted by Reserve Bank of India (RBI), National Central bank in August 2001• It is basically a voluntary mechanism to reorganize outstanding debt obligations• The reorganization of the debt can be made by the following ways:  Increasing the tenure of the loan  Reducing the rate of interest  One time settlement  Conversion of debt into equity  Converting un-serviced portion of interest into term loan 2
  3. 3. Key objectives of CDRKey objectives:• Joint efforts between the company management and the lenders of a viable company (only genuine cases being registered) to provide breathing space and make it more sustainable• To ensure timely and transparent mechanism for restructuring of corporate debts of viable corporates facing problems for the benefit of all concerned• To aim at preserving viable corporates that are affected by certain internal and external factors• To minimise the losses to the creditors and other stakeholders through an orderly and co- ordinated restructuring programmeNo impact on the business operations: Business continues as usual, while there is a ‘stand still’ with respect to all bank obligations Contractual obligations with vendors, customers, employees continue to be unaffected CDR is NOT ‘Chapter 11 Bankruptcy’ 3
  4. 4. Typical time linesTypical time lines• Day 1: Reference to CDR Cell and ‘stand still’ agreement with the participating banks with respect to outstanding debt obligations• Day 90-120: Approval of the scheme and sanction of additional banking facilities 4
  5. 5. Cases under CDR Overall status as on 30th June, 2012 Rs crs Cases under finalization of Total cases approved (including Total references received restructuring packages cases withdrawn/ exitedNo. of cases Aggregate debt No. of cases Aggregate debt No. of cases Aggregate debt 433 227,021 61 37,172 309 168,472In the past, there have been several well known companies which have been referred toCDR, few of them are as follows:• Subhiksha Retail• Vishal Retail• GTL Infra• Air India• Wockhardt• India Cements• Jindal Steel• Essar Steel• HPL 5
  6. 6. Cases under CDRIndustry wise breakup as on 30th June 2012 : Rs. 168,472 Crs (US$30Bn) Rs crs Iron & Steel Others 39,714 45,287 (24%) (27%) 17,490 Ship-Breaking/ 4% (10%) Infrastructure Ship Building 4% Cements 12,090 4% (7%) Sugar 9,886 4% Textiles 5% (6%) NBFC 5% Telecom Fertilizers Construction 6
  7. 7. For more details, please visit www.cdrindia.org 7

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