This type of debt restructuring can be considered a «distressed exchange» of debt, and thus a default on the terms of the original debt. (businessinsider.com)
Clients also agree to pay service fees equal to about 15 per cent of their original debt. (macleans.ca)
However, the creditors still get the short end of the financial stick: the face value of the common stock to be received will almost certainly be less than the face value of the original debt. (heritage.org)