Strategic Debt Restructuring scheme

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Lenders’ Forum must collectively hold 51% or more of the equity shares issued by the company. Lenders can appoint professional managers to run the company and are expected to divest their stake in the company as soon as possible. On completion of conversion of debt to equity existing asset classification of the account, as on the reference date continues for a period of 18 months from the reference date.

Strategic Debt Restructuring scheme (SDR) was implemented in 2015 to ensure that the shareholders bear the first loss rather than the debt-holders in cases of restructuring (Reserve Bank of India, 2015b). Accounts that fail to achieve the agreed critical conditions and projected viability milestones after initial restructuring under or, outside of CDR, can be subjected to SDR. If the borrower is not able to achieve the viability milestones and/or adhere to the ‘critical conditions’ after initial restructuring, the JLF immediately reviews the account and examine whether the account will be viable by effecting a change in ownership. If found viable under such examination, the JLF may decide on whether to invoke the SDR. This involves converting loan dues to equity shares. Post the conversion of debt into equity, all lenders under the Joint

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