What is Corporate Debt Restructuring (CDR) ?

Defination:

• CDR is an arrangement where the lenders and the management of a defaulting company strike a deal to revive the borrower.
• A borrower going through CDR receives some breathing space to repay loan on the condition that it sticks to certain commitments.
• Even today banks have the power to convert outstanding debt into equity, but not all lenders and CDR deals insist on such conditions.
• Besides such conversion - be it based on the borrower's book value for unlisted firms or as per the SEBI (Securities and Exchange Board of India) formula in case of listed companies - would rarely give the joint forum of lenders 51% equity interest in defaulting companies.
• This will change. For instance, even if the unpaid loan amount is as little as  Rs.500 crore, breach of certain pre-agreed covenants would pave the way for lenders to gain 51% control of the equity. 
• Once the CDR covenants are breached, lenders would decide in a month or so whether they would accelerate the process to take control. 
• If banks think there is reason to move in, they would then serve a notice to the company where it would be mentioned that after a certain time, the lenders would become the majority shareholder.