equitization

Vocabulary Word

Definition

'Equitization' is when debt is converted into equity of a company or a firm. If you're a lender who hasn't been repaid, rather than lose your money, you might accept ownership shares of the business owing you money. It's a way to maneuver around financial obstacles.

Examples in Different Contexts

In corporate restructuring, 'equitization' is pursued to revitalize state entities. A corporate consultant might suggest, 'The equitization of this public sector unit can enhance operational efficiency and foster innovation, opening avenues for sustainable growth and development.'

Practice Scenarios

Economics

Scenario:

As the government looks towards liberalizing its economy, the role of state-owned enterprises will have to be redefined to stimulate growth and competition.

Response:

The government should probably consider the equitization of some state-owned enterprises to catalyze that process.

Bankruptcy

Scenario:

The company's assets are insufficient to cover the outstanding debts. We need to negotiate with the creditors for a potential resolution.

Response:

Wouldn't equitization be a fair solution for both parties, turning creditors into investors instead of driving the company towards liquidation?