The Corporate Debt Restructuring (CDR) mechanism, established by the Reserve Bank of India in 2001, is a voluntary process for reorganizing outstanding debt obligations of viable companies. It aims to provide a structured approach for companies facing challenges while ensuring minimal disruption to business operations and timely restructuring for the benefit of creditors and stakeholders. As of June 30, 2012, multiple companies have utilized this mechanism, which involves a coordinated restructuring program without impacting vendor and customer contracts.

1. Brief overview of Corporate Debt Restructuring (CDR)
October 2012
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2. What is CDR mechanism?
• Instituted by Reserve Bank of India (RBI), National Central bank in August 2001
• It is basically a voluntary mechanism to reorganize outstanding debt obligations
• The reorganization of the debt can be made by the following ways:
 Increasing the tenure of the loan
 Reducing the rate of interest
 One time settlement
 Conversion of debt into equity
 Converting un-serviced portion of interest into term loan
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3. Key objectives of CDR
Key objectives:
• Joint efforts between the company management and the lenders of a viable company (only
genuine cases being registered) to provide breathing space and make it more sustainable
• To ensure timely and transparent mechanism for restructuring of corporate debts of viable
corporates facing problems for the benefit of all concerned
• To aim at preserving viable corporates that are affected by certain internal and external factors
• To minimise the losses to the creditors and other stakeholders through an orderly and co-
ordinated restructuring programme
No impact on the business operations:
 Business continues as usual, while there is a ‘stand still’ with respect to all bank obligations
 Contractual obligations with vendors, customers, employees continue to be unaffected
CDR is NOT ‘Chapter 11 Bankruptcy’
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4. Typical time lines
Typical time lines
• Day 1: Reference to CDR Cell and ‘stand still’ agreement with the participating banks
with respect to outstanding debt obligations
• Day 90-120: Approval of the scheme and sanction of additional banking facilities
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5. Cases under CDR
Overall status as on 30th June, 2012 Rs crs
Cases under finalization of Total cases approved (including
Total references received restructuring packages cases withdrawn/ exited
No. of cases Aggregate debt No. of cases Aggregate debt No. of cases Aggregate debt
433 227,021 61 37,172 309 168,472
In the past, there have been several well known companies which have been referred to
CDR, few of them are as follows:
• Subhiksha Retail
• Vishal Retail
• GTL Infra
• Air India
• Wockhardt
• India Cements
• Jindal Steel
• Essar Steel
• HPL
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6. Cases under CDR
Industry wise breakup as on 30th June 2012 : Rs. 168,472 Crs (US$30Bn)
Rs crs
Iron & Steel
Others
39,714
45,287 (24%)
(27%)
17,490
Ship-Breaking/ 4% (10%) Infrastructure
Ship Building
4%
Cements
12,090
4% (7%)
Sugar 9,886
4% Textiles
5% (6%)
NBFC
5% Telecom
Fertilizers
Construction
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7. For more details, please visit www.cdrindia.org
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