Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
Debt for equity swaps are an important consensual restructuring tool used to help deleverage a company’s balance sheet in a tax efficient manner. They essentially involve one or more of the creditors of a company exchanging their debt for some form of equity. They can be used where a company is over-geared and the value of a company is less than the value of the debt it is seeking to service.
Debt for equity swaps are usually considered when they can’t re-bank and there is no possibility of a further equity injection. From a creditor’s perspective, they will be looking to a debt for equity swap to increase the likelihood of non-equitised debt being repaid, to preserve any enterprise value and to give them a share in any potential equity upside.
The type of equity can take different forms such as a separate class of shares (which should have the rights or ordinary shares for tax purposes) or other equity-based instruments, such as warrants or options.
The rights associated the equity instrument are key and are usually heavily negotiated. These include:
• negative controls (which are particularly important for consolidation/shadow director issues)
• a priority of return in favour of the creditor, and
• restrictions to preserve that priority (anti-dilution, no dividends etc)
Free trials are only available to individuals based in the UK
* denotes a required field
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial. See our full terms here.
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
0330 161 1234