Workout
A workout is a financial restructuring of a company’s debt obligations. It is a process in which a company’s creditors and debtors negotiate to restructure the company’s debt obligations in order to make them more manageable and to avoid bankruptcy. The goal of a workout is to reach an agreement that is beneficial to both the company and its creditors. The workout process can involve a variety of different strategies, such as debt forgiveness, debt consolidation, debt restructuring, and debt refinancing.
History of the Term
The term “workout” was first used in the early 1980s to describe the process of restructuring a company’s debt obligations. The term was popularized by the book “The Workout: A Guide to Corporate Restructuring” by Robert J. Shiller and Richard S. Ruback. The book was published in 1983 and provided an in-depth look at the process of corporate restructuring. Since then, the term has become widely used in the financial world to refer to the process of restructuring a company’s debt obligations.
Comparison Table
| Strategy | Benefits | Risks |
|---|---|---|
| Debt Forgiveness | Reduced debt burden | Reduced creditor returns |
| Debt Consolidation | Reduced interest payments | Increased risk of default |
| Debt Restructuring | Reduced debt burden | Reduced creditor returns |
| Debt Refinancing | Reduced interest payments | Increased risk of default |
Summary
A workout is a financial restructuring of a company’s debt obligations. It is a process in which a company’s creditors and debtors negotiate to restructure the company’s debt obligations in order to make them more manageable and to avoid bankruptcy. The goal of a workout is to reach an agreement that is beneficial to both the company and its creditors. The workout process can involve a variety of different strategies, such as debt forgiveness, debt consolidation, debt restructuring, and debt refinancing. For more information about this term, you can visit websites such as Investopedia, The Balance, and Bankrate.
See Also
- Debt Forgiveness
- Debt Consolidation
- Debt Restructuring
- Debt Refinancing
- Bankruptcy
- Debt Management
- Debt Relief
- Debt Settlement
- Debt Negotiation
- Debt Collection
