Restructuring a purchased loan can appeal to distressed debt buyers for many reasons. While often it is to maximize investment returns, in certain cases it can also help the purchaser avoid the need for balance sheet write-downs.
This is particularly applicable if a purchaser concludes that the borrower is creditworthy and stable on a long-term basis and has demonstrated a viable plan to repay the debt, and is only experiencing financial distress due to current diminished operating cash flows, depreciated collateral values, tightening credit markets or other factors.
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