Debt equity swap operations for limited liability companies

Publication

Also in: French

12-12-2023

2 minutes read

The question of increasing capital by offsetting receivables is part of the more general issue of converting receivables into capital. The aim of this article is to clarify the key elements to be taken into consideration for this type of transaction and to provide and in-depth analysis on the possibility and conditions of its applicability to private limited liability companies (sociétés à responsabilité limitée).

A debt equity swap involves a company's creditor becoming a partner in the company by converting the claim or debt instrument he holds against the company into shares in the company.

A number of questions arise in this case:

What is the nature and legal basis of this operation?
Is such operation possible for private limited liability companies?
What impact does the company's situation have on the feasibility of the operation?
What practical aspects need to be considered?
What could be the potential developments?

In today's context of increasing demand for legal flexibility, this mechanism holds great potential, particularly for private limited liability companies, as a tool for settling liabilities and improving the company's financial situation.

Read the whole article on the French version of the page.