Dear all,
If a company had opted for ECB and fails to make repayment of loan,due to consistancy in the accumulated losses in every year, is there any remedy available for the company?? whether company can convert ECB loan into equity?? what are the advantages of that?? and why so?? whether conversion of ECB loan into equity is advantageous for the company?? pls resolve these querry asap....
Thanks
Dipeeka
The company can Write off ECB against losses,if Borrowee's are inside members.This will be handy other way round u could call it as Reconstructed balance sheet(infact it is) and this would make the balance sheet Strong, and open for Fresh financing by Fresh issue of Equity to same members
OR
A direct Fresh issue of Equity to ECB providers,though Losses would Remain and Balance sheet Will not have Weight For Fresh Financing.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
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