Debt waiver

A debt waiver (abandon de créance) is the voluntary and formal renunciation by a creditor of all or part of a receivable owed by a debtor. It may be total or partial, gratuitous or in exchange for specific debtor commitments. In corporate finance and restructuring, debt waivers are used to restore a debtor company's financial position — reducing its liabilities and improving its equity base. Their tax treatment differs significantly between France (potentially deductible by the creditor under conditions, or taxable as income for the debtor) and Switzerland (where tax neutrality conditions apply in restructuring contexts).

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Example: a Swiss industrial subsidiary in financial difficulty obtains a partial debt waiver of CHF 1.2 million from its parent on a CHF 2.0 million intercompany loan. In the financial due diligence preceding the subsidiary's sale, this waiver is analysed as a non-recurring item and excluded from the normalised EBITDA calculation — while its tax treatment is verified to confirm there is no latent fiscal liability for the target.

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Hectelion analyses past debt waivers in due diligence to assess their impact on earnings quality and to identify potential tax contingencies.