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  • Writer's pictureRenzo Mazzini

Converting in-debtness into profits

Business owners are currently having difficulty generating  cash flow and net income to comply and satisfy with their payment obligations. Restructuring debt could be an option. However, if they fail they may be end up into a bankruptcy proceeding. The ultimate outcome is conversion of existing debt into equity.

Companies may see the type of equity received as a vehicle for tax consequences. Investors do not, since they will hold face value of the equity directly through a note payable (exchange indebtedness with an initial maturity of agreed years).  Here comes the opportunity to elaborate a state of current business valuation , including the debt to find the best and most appropriate option turn around the solvency of the company and start over. Indeed, it will take a solid partner to understand the real “nuts and bolts” of a company.

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