Abstract
Debt—equity swaps have grown in popularity, despite the implication that the debt cannot be repaid in full, which makes them unpopular with banks, and hard to sell to credit committees. The technique is attractive in the right cases, however. This section focuses on the two main types of situation in which it is appropriate, and some of the principles behind it, rather than the many variants available. The need for a debt—equity swap arises either where a financial solution is expected to be sufficient or to buy time to cure more fundamental weaknesses, when the financial measures are necessary but not sufficient, or there is doubt as to whether any measures will be sufficient.
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