Debt restructuring is a process that allows a private or public company, or a sovereign entity facing cash flow problems and financial distress to reduce and renegotiate its delinquent debts in order to improve or restore liquidity so that it can continue its operations.Replacement of old debt by new debt when not under financial distress is called "refinancing". Out-of-court restructurings, also known as workouts, are increasingly becoming a global reality.