Stressed and special-situation funding: options when a business is under pressure

A stretched balance sheet, a temporary crunch or an account drifting towards NPA feels like a dead end. It usually isn’t. India has a real market for stressed and special-situation capital — but the options narrow sharply the longer you wait.

Act before the label sticks

The best outcomes come from restructuring while an account is still standard. Once it is classified NPA, choices shrink and costs rise. Early, honest engagement with lenders is the highest-value move a promoter can make.

The main routes

• Restructuring or rescheduling under the RBI Prudential Framework for resolution of stressed assets.
• A one-time settlement (OTS) with existing lenders.
• Refinancing by an NBFC, AIF or private-credit fund with a higher risk appetite.
• Special-situation or distressed funds that take out or recapitalise the debt.
• Resolution through an ARC or, as a last resort, the IBC.

What lenders and funds need to see

A credible turnaround plan, numbers that are honest about the problem, and a clear source of repayment. Special-situation capital is priced for risk, so the case has to genuinely hold together.

We structure these situations end to end — the plan, the financials and the lender and fund conversations — to protect both the business and the promoter. More on our debt practice →