Meaning: Standing on equal footing. In bankruptcy: all creditors are treated equally, and the court orders that they be repaid in equal fractional amounts. This ensures that no creditor is given preference over another during the process.

A third party company, usually a parent that agrees to be liable for a company's debts if they default.

Face Value/ Principal Value/ Par Value

Nominal amount due at maturity, Represents 100% principal (par value) Typically in denominations of $1000

Bond that requires a lump-sum principal payment at the very end and interest paid annually or semiannually. (Ex.) 5% coupon maturing in 5 years, bond is worth $1000, 1k par is paid at the end of year 5.

A Coupon is what? What are the three different types of payments?

Refers to the annual interest rate paid on a bond, expressed as a percentage of its face value; compensates lenders for bearing default risk • May be paid annually, semi-annually, quarterly, etc (Can be paid in Cash (most common), PIK, or Toggle PIK)

PIK (Payment-in Kind)

The use of non-cash assets (goods, services, securities) in order to pay back a loan. Allows for a company to reduce cash flow if they are financially restrained. It is a taxable form of payment and common in distressed companies.

The creditor company can choose the form of payment to be PIK or cash depending on the amount of funds the debtor company has available. PIK and Toggle PIK are both common in distressed companies.

a required repayment of principal before maturity, must be paid even if there is no cash on hand. Bonds usually do not have this.

Excess Cash Flow Sweep

If a company makes what is considered a "positive cash flow", the company must use 25-75% of the earnings to repay outstanding loans, more flexible than amortization

Covenants are contractual rules in a loan/indenture/credit agreement that lays out conditions the borrowers must follow

A legal claim on an asset, 1st lien means first in line to claim asset and the debtors will be the first to get paid. A form of senior debt, includes: Revolvers

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Restructuring Terms

Question	Answer
Pari Passu	Meaning: Standing on equal footing. In bankruptcy: all creditors are treated equally, and the court orders that they be repaid in equal fractional amounts. This ensures that no creditor is given preference over another during the process.
Guaranty	A third party company, usually a parent that agrees to be liable for a company's debts if they default.
Face Value/ Principal Value/ Par Value	Nominal amount due at maturity, Represents 100% principal (par value) Typically in denominations of $1000
Bullet Bond	Bond that requires a lump-sum principal payment at the very end and interest paid annually or semiannually. (Ex.) 5% coupon maturing in 5 years, bond is worth $1000, 1k par is paid at the end of year 5.
A Coupon is what? What are the three different types of payments?	Refers to the annual interest rate paid on a bond, expressed as a percentage of its face value; compensates lenders for bearing default risk • May be paid annually, semi-annually, quarterly, etc (Can be paid in Cash (most common), PIK, or Toggle PIK)
PIK (Payment-in Kind)	The use of non-cash assets (goods, services, securities) in order to pay back a loan. Allows for a company to reduce cash flow if they are financially restrained. It is a taxable form of payment and common in distressed companies.
Toggle PIK	The creditor company can choose the form of payment to be PIK or cash depending on the amount of funds the debtor company has available. PIK and Toggle PIK are both common in distressed companies.
Amortization	a required repayment of principal before maturity, must be paid even if there is no cash on hand. Bonds usually do not have this.
Excess Cash Flow Sweep	If a company makes what is considered a "positive cash flow", the company must use 25-75% of the earnings to repay outstanding loans, more flexible than amortization
Covenants	Covenants are contractual rules in a loan/indenture/credit agreement that lays out conditions the borrowers must follow
A lien is?	A legal claim on an asset, 1st lien means first in line to claim asset and the debtors will be the first to get paid. A form of senior debt, includes: Revolvers

Created by: Yzou

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