process of changing a firm's capital structure by altering the mix of debt and equity financing without changing the total amount of capital. This process often occurs as part of reorganization under the bankruptcy laws. In defeasance, the total capital amount can change.
any major changes in a corporation's paid in capital, resulting from issuance of new shares of stock, reorganization in bankruptcy, or exchange of common stock shares for bonds and notes, as in a leveraged buyout. In banking, it is any restructuring of a troubled bank assisted by a deposit insurance fund, as in a bailout of a failing bank, where the insurance fund pays the acquiring bank the difference between the book value of a troubled bank's assets and the estimated market value. The insurance fund may also take an equity position in the restructured bank.
alteration of a corporation's capital structure, such as an exchange of bonds for stock, or of preferred stock for common stock, or of one type of bond for another. Bankruptcy frequently gives rise to recapitalization.
alteration of a corporation's capital structure, such as an exchange of bonds for stock. bankruptcy is a common reason for recapitalization; debentures might be exchanged for reorganization bonds that pay interest only when earned. A healthy company might seek to save taxes by replacing preferred stock with bonds to gain interest deductibility.
