What It Is
Business debt restructuring—sometimes called a "workout"—is a broader process for addressing an unsustainable payment structure. Rather than focusing on a single obligation, restructuring looks at the business's overall debt picture and attempts to reorganize multiple obligations into a manageable, stabilized payment structure.
This may involve negotiation with multiple creditors, changes to payment arrangements, and a coordinated strategy to address the business's total debt burden.
How It Generally Works
Full debt picture is assessed
All obligations—MCAs, lines of credit, equipment loans, and other business debt—are reviewed together to understand the total burden.
A coordinated strategy is developed
Rather than addressing each creditor separately, a plan is developed to approach multiple creditors in a coordinated way.
Negotiation with creditors may occur
Creditors may be approached to discuss modified payment terms, temporary relief, or other arrangements that could help stabilize the business.
What Problem It May Address
Restructuring may be relevant when a business has multiple obligations and the combined payment burden has become unsustainable. Possible objectives may include:
- Reducing immediate cash-flow pressure
- Changing payment arrangements with one or more creditors
- Organizing multiple obligations into a coherent structure
- Creating a path toward stabilization
- Addressing distressed obligations before the situation deteriorates further
When It May Warrant Consideration
Restructuring may be worth exploring when:
- The business has multiple MCA positions or a mix of debt types
- Individual payment modifications are not sufficient to address the overall burden
- The business is fundamentally viable but the debt service is unsustainable
- The business wants a coordinated approach rather than dealing with creditors one at a time
- The situation is deteriorating but has not yet reached crisis
Factors That May Affect Feasibility
Important Tradeoffs & Considerations
- Creditors are not obligated to agree to restructured terms. Outcomes are not guaranteed.
- Restructuring may take time, and creditors may continue collection activity during the process.
- If the business is facing litigation, restructuring alone may not address legal deadlines.
- Restructuring does not eliminate debt—it reorganizes it. The business still owes the obligations unless they are separately settled.
- Some creditors may be unwilling to participate, requiring the business to consider different approaches for different obligations.
Documents That May Be Needed
- All MCA agreements and debt documents
- Recent bank statements (3–6 months)
- Complete business debt schedule
- Profit and loss statements
- Balance sheet
- UCC search results
- Any collection or legal correspondence
- List of all creditors and contact information
Questions to Ask Before Proceeding
- 1Is my business fundamentally viable, or is the debt the primary problem?
- 2How many creditors are involved, and are they likely to participate?
- 3What is my total monthly debt service, and what would a sustainable level look like?
- 4Are any creditors already pursuing legal action?
- 5Should I obtain professional assistance to coordinate the process?
- 6What happens if some creditors agree but others do not?
How It Differs From Other Options
Restructuring is broader than payment modification (which focuses on a single obligation) and does not involve new financing like refinancing. It may include settlement of some obligations as part of a larger plan, but settlement alone focuses on resolving one obligation rather than reorganizing the entire debt structure.
Comparing the Major Options
A side-by-side look at how these paths differ. No option is ranked above another.
Refinance / Buyout
Replace MCA structure with longer-term, potentially more sustainable financing
- Involves new financing?
- Yes
- Replaces existing obligation?
- Yes
- Changes existing payment terms?
- Yes
- Creditor negotiation potentially involved?
- No
- Strong underwriting generally important?
- Yes
- Can default status affect feasibility?
- Yes
Qualification depends on credit, revenue, profitability, and existing MCA exposure
Learn morePayment Modification
Adjust existing payment terms without new financing or reducing balance
- Involves new financing?
- No
- Replaces existing obligation?
- No
- Changes existing payment terms?
- Yes
- Creditor negotiation potentially involved?
- Yes
- Strong underwriting generally important?
- No
- Can default status affect feasibility?
- Yes
Depends on creditor willingness; not guaranteed
Learn moreRestructuring / Workout
Reorganize multiple obligations into a manageable, stabilized payment structure
- Involves new financing?
- No
- Replaces existing obligation?
- No
- Changes existing payment terms?
- Yes
- Creditor negotiation potentially involved?
- Yes
- Strong underwriting generally important?
- No
- Can default status affect feasibility?
- Yes
Often involves coordinated negotiation across multiple creditors
Learn moreSettlement / Resolution
Resolve an obligation for an agreed amount under negotiated terms
- Involves new financing?
- No
- Replaces existing obligation?
- No
- Changes existing payment terms?
- No
- Creditor negotiation potentially involved?
- Yes
- Strong underwriting generally important?
- No
- Can default status affect feasibility?
- Yes
May involve default status, collection activity, or litigation; professional review advised
Learn moreThe appropriate path depends on the business.
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