• DEBT RESTRUCTURING MODEL: FROM COMMERCIAL CREDIT TO NON-PAYMENT OF DEBT

Abstract

In commercial transactions of goods and services, it is often required to extend credit to finance buyers who cannot pay in cash. Commercial credit transactions benefit both the buyer and seller. The seller increases sales because credit makes it possible to sell to buyers who do not have the cash for full payment of the commercial transaction. For buyers it becomes possible to acquire goods and services that would otherwise not be available to them. However, often an undesirable condition occurs when the debtor is in default of payment, usually because of insolvency or loss of liquidity for long periods. In these cases the most common solution is to restructure the debt, by establishing new payment commitments, feasible for the debtor. The aim of this paper is to propose a model for restructuring credit, based on equivalent equations.