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Debt Restructuring · Question
Short answer
Lenders are most receptive to causes outside the borrower's control that hit a viable business: a sharp demand drop, a major customer's delay, a natural event, a policy change or a project clearance held up. They are sceptical of causes linked to poor controls, diverted funds or aggressive unfunded expansion. Your documents, not your description, decide which category your case falls into.
Lenders do not apply a fixed list, and rules or internal policy may set the exact criteria. In practice they sort causes by two questions: was the event beyond reasonable control, and does the business still have the ability to repay once the event passes.
| Cause | Usual reading |
|---|---|
| Large customer delays or defaults payment | Often genuine, if the dependence was reasonable and the dispute is documented |
| Sector-wide slowdown or demand shock | Generally accepted when peers show the same pattern |
| Delayed approvals or clearances for a project | Accepted when the delay is evidenced and not caused by the borrower |
| Natural calamity or disruption of supply | Accepted with proof of the event and its effect on operations |
| Sharp rise in input costs not passed on | Reasonable if the margin pressure is visible in your accounts |
| Expansion funded from working capital | Treated as a management choice, so harder to argue |
| Funds moved to related entities | Raises serious concern and may close the discussion |
Management mistakes, such as slow collections or weak cost control, do not rule out a request if the owner acknowledges them and shows corrective action. Honest explanation counts for more than pretending the cause was external.
Match the cause to your numbers
If you cite a customer delay, the bank statements should show the missing receipts. If you cite a cost shock, the margin trend should show it. A cause that the books cannot confirm will not persuade.
The decision is the lender's, and acceptance of a cause does not guarantee a restructuring. It only places your request on firmer ground.
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This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority. Lalsar Holdings' financial advisory and financing work is advisory and facilitation only. Lalsar Holdings is not a lender. Sanction and disbursement of any credit facility is at the sole discretion of the partner bank, NBFC, or financial institution involved, subject to their own eligibility criteria and credit policy.