In a successfully negotiated debt restructuring, the standstill period terminates when a restructuring agreement is signed. The restructuring agreement supersedes the terms of the borrower’s original debt facilities and records the terms of the restructuring.
The restructuring agreement will likely be the product of extensive negotiation. The borrower’s restructured obligations should reflect cashflow and other financial projections delivered by the investigating accountants.
As with standstill agreements, there is no ‘market standard’ restructuring agreement. However, the terms of any restructuring may include an ‘interest holiday’, a reduction (or ‘haircut’) in debt, the conversion of debt into equity or the introduction of a convertible bond which alleviates the debt burden on the company but aligns the interests of the creditors with the shareholders in the long term.