What is a “modification of debt” in a Chapter 11 bankruptcy?

In South Carolina, a “modification of debt” is a legal process that occurs during a Chapter 11 bankruptcy. This process allows for the debtor or the creditor to request changes to the terms of an existing debt. This could include changes to the interest rate, the repayment schedule, the maturity date, or other terms of the debt. It also can include the restructuring of a debt so that the creditor can receive part of the debt in a lump sum. The modification of debt is a powerful tool in reorganizing the finances of the debtor and resolving the creditors’ claims. It allows for the debt to be restructured in ways that are beneficial to both parties. Through this process, debt can be paid in a more orderly manner, allowing the debtor to avoid liquidation and preserving the value of the business. Another option in a Chapter 11 bankruptcy is “debt restructuring,” which is similar to a modification of debt, but also involves the issuance of new debt. This new debt will generally have different terms than the existing debt. This may include the interest rate, maturity date, repayment plan, or other terms. In a Chapter 11 bankruptcy, modification of debt and debt restructuring can help to resolve creditors’ claims and provide a more feasible repayment plan for the debtor. These tools can help to reorganize finances and give the debtor a fresh start.

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What is a “modification of debt” in a Chapter 11 bankruptcy?

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