Troubled debt restructuring
Let's imagine you have a bunch of toys, and you owe your friend some of them. But you can't pay your friend back right now because you don't have enough money or other toys. So your friend lets you keep your toys, but they make a new plan for you to pay them back later.
This new plan might mean that you have to give your friend more toys later on to make up for what you owe, or they might give you more time to pay back what you owe them. This new plan is called a "troubled debt restructuring."
Just like how you might need a new plan to pay back your friend, companies and banks sometimes have trouble paying back the money they owe to other people or companies. So they make a new plan, just like you did with your friend.
This is important because when companies and banks have too much debt that they can't pay back, it can cause problems for a lot of people. By making a troubled debt restructuring plan, they can make sure they can pay what they owe without causing bigger problems.
This new plan might mean that you have to give your friend more toys later on to make up for what you owe, or they might give you more time to pay back what you owe them. This new plan is called a "troubled debt restructuring."
Just like how you might need a new plan to pay back your friend, companies and banks sometimes have trouble paying back the money they owe to other people or companies. So they make a new plan, just like you did with your friend.
This is important because when companies and banks have too much debt that they can't pay back, it can cause problems for a lot of people. By making a troubled debt restructuring plan, they can make sure they can pay what they owe without causing bigger problems.