Need restructuring, not bankruptcy

Most stressed lenders should go into restructuring with the IBC being its bedrock

In India, we tend to think of debt that performs vs. debt that goes into the bankruptcy process. However, when there is stress in repayment, the first port of call should be a negotiation that leads to debt restructuring. Restructuring [under the shadow of the Insolvency and Bankruptcy Code (IBC)] is the best of all worlds, and only a few irreconcilable situations should slip into the bankruptcy code. Many features of the Indian institutional landscape come in the way.

Suppose there is debt with a net present value (NPV) of Rs 100. Suppose the firm gets into trouble and this debt