Debtor and creditor advisory
Debtor and creditor advisory describes distinct restructuring mandates undertaken for companies that owe obligations and stakeholders that hold financial claims against them.
Definition
Debtor advisory assists a company or borrower in managing liquidity, obligations and restructuring options. Creditor advisory assists lenders, bondholders, trade creditors or committees in assessing claims, recoveries and negotiation strategy.
Different perspectives
| Question | Debtor perspective | Creditor perspective |
|---|---|---|
| Liquidity | How can the business preserve runway? | Will new funding protect or dilute recovery? |
| Value | What capital structure can the enterprise sustain? | What recovery and priority attach to the claim? |
| Operations | How can viability and performance improve? | Is the plan credible and properly governed? |
| Negotiation | How can sufficient stakeholder support be obtained? | What concessions, protections and control are justified? |
Typical advisory work
Debtor mandate
- Cash forecasting
- Business-plan review
- Options and stakeholder strategy
- Financing and transaction execution
Creditor mandate
- Claim and document analysis
- Independent business-plan review
- Recovery and scenario analysis
- Term negotiation and monitoring
Shared evidence
- Liquidity and value
- Debt capacity
- Operational viability
- Alternative outcomes
Restructuring interaction
- Information: establish protocols for confidential financial and operational data.
- Independent analysis: each side tests value, liquidity and alternatives.
- Proposal: the debtor or a stakeholder advances restructuring terms.
- Negotiation: parties bargain over economics, priority, governance and milestones.
- Implementation: consents, documentation and any formal process complete the transaction.
Independence and information
The same advisory firm generally cannot represent opposing constituencies in the same matter. Engagements require conflict checks, information barriers and clear identification of the client. Creditor groups also need governance for adviser appointment, confidentiality and cost sharing.
Related concepts
Sources and further reading
View sources and editorial notes
- World Bank, Principles for Effective Insolvency and Creditor/Debtor Regimes.
- UNCITRAL, Legislative Guide on Insolvency Law.
- Applicable loan, bond and intercreditor documentation.
Editorial note: This entry neutrally distinguishes advisory mandates. Rights, duties and information access depend on contracts, law and process.