One way of dealing with insolvency is a private agreement between creditors — often just banks and bondholders — and the debtor to effect a restructuring.

Such a restructuring might entail, for example, a rescheduling of the debts of the debtor, the conversion of such debts into shares, a disposal of the debtor’s assets and a trimming of the debtor’s business. Reaching a private agreement is by far the most common solution to dealing with insolvency and does not involve the courts. This is referred to in industry jargon as an “out-of-court workout”, a “consensual workout”, an “informal workout” or simply a “workout”.

This guide sets out a model of best practices, in the form of both principles and practice tips, for workouts of corporate debtors in Asia. Although focused on workouts that are entirely consensual and out of court, this guide inevitably makes some reference to the court process since such process is the next step if consensus cannot be reached in a workout. 

This guide has lineage and pedigree with earlier iterations of workout philosophy in other jurisdictions, but considers the diverse cultures, heterogeneous economic development, and different legal systems in Asia by being respectfully restrained.