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Distress debt

About

A type of investment for investors to buy the debts of the company which is facing financial crisis, seeking to make profit by holding debt to maturity when the company recovers.

It can also be a debt instrument for the company seeking investors during financial difficulties.

Distress debt can be claimed by these kinds:

  1. Bank loans.

  2. Corporate bonds.

  3. Trade claims.

  4. Real estate debt.

List of documents needed for distress debt:

The specific documents required when proceeding with distressed debt will vary depending on the nature of the investment and the type of debt being acquired. However, here are some common documents that may be needed:

  1. Purchase agreement outlining the terms and conditions of the purchase of the distressed debt.

  2. Due diligence reports providing detailed information about the underlying asset, including financial statements, legal documents, and other relevant information.

  3. If the distressed debt being acquired is a loan, then Loan documents will be needed, including the original loan agreement, any amendments or modifications, and payment history.

  4. If the loan is secured by collateral, the security agreements like mortgages, or other security instruments will be needed.

  5. Disclosure documents may be required, such as offering memorandums, private placement memorandums, or prospectuses.

  6. Tax documents may be required, including tax returns, financial statements.

  7. Various legal documents like corporate resolutions, board minutes, and other legal documents related to the investment.

  8. If the investment involves insurance, insurance policies may be required.

Workflow of the process with us:

  1. Conduct Thorough Research: We will conduct thorough research of the opportunities, the company or entity. This includes analyzing financial statements, understanding the legal structure of the debt, and assessing the value of any collateral.

         

We will guide you to have a long-term view while investing.

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2. Conduct due diligence: Once the company is short-listed, a due diligence will be conducted to evaluate the accuracy and reliability of the information. Checking if there are any potential risks, with past and current financial metrics.

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The market for distressed debt can be volatile, and we ensure to keep an eye on market conditions to see that investments are made at the right time.

 

3. Negotiate with the seller: There are plenty of areas where the agreement may not land as per our needs, we help you negotiate with the borrower or investor using right stream of knowledge.

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4. Keeping a check on legal provisions and it's applications: Investing in distressed debt requires an understanding of the legal issues involved.

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