While debt restructuring can negatively impact your credit score, it's generally still preferable to the impact a bankruptcy or foreclosure can have, and it can prevent more extreme financial obstacles in the future.
A modification is a troubled debt restructuring (TDR) if (1) the borrower is experiencing financial difficulty, and (2) the lender grants the borrower a concession.
The debt restructuring process typically involves getting lenders to agree to reduce the interest rates on loans, extend the dates when the company's liabilities are due to be paid, or both.
These steps improve the company's chances of paying back its obligations and staying in business.