Debt-for-equity swap

In a debt-for-equity swap, a lender or other creditor accepts an equity interest in place of a specified debt claim. The transaction can reduce contractual interest or repayment pressure, but it changes ownership, control and the risk borne by the creditor. The exchange terms, valuations, legal approvals and accounting treatment matter. Compare the creditor's expected recovery under the swap with alternative outcomes, and consider dilution and incentives for existing owners. A lower nominal debt balance is not by itself proof that all stakeholders gain.