The renewed focus for banks to bolster balance sheets and implement long-term deleveraging programmes, coupled with a rise in both distressed and cash-rich corporate borrowers, has meant an upturn in distressed debt sales, debt swaps and opportunistic debt buybacks. Direct debt buybacks by debtors in financial distress are tax-inefficient. Two wide-ranging legislative deeming provisions are intended to block indirect buybacks of debt by corporate groups. Their scope, however, is such as to capture many innocent, vanilla corporate finance transactions.
