Informal options - Debt Refinancing

Published: 09/06/2022 By Hannah McCormack

Continuing with our informal insolvency options series of blogs – our next solution is Debt Refinancing

What is Debt Refinancing?

The idea behind debt refinancing is to replace the existing debt with new debt for the same amount, but with more favourable terms and or conditions. For example, a lower rate of interest or an extension on a repayment period. The logic behind refinancing is to reduce the monthly outgoings in order to be able to service all debts owed each month.

Although this option will help to ease the short-term cash-flow difficulties which in turn will hopefully allow the business to reach a more stable and profitable position, the level of debt is still the same and in fact it may even be higher if the finance is to be taken over a longer period.
In order for refinancing to be a success you must ensure the company is able to be turned around during any informal arrangement period. If the cause of the financial difficulty is not a long term issue which has adversely affected the future viability of the business, refinancing can be a great option. However, care must be taken to ensure steps are taken to get the company back to a more stable position than prior to implementing any informal arrangement.

Give us a call to see how we could help get your debt refinanced and business back on track 020 8661 7878 or email 

See our previous blog on "arrangements with creditors" here