In Latin America, debt has long been a lever for growth—and a double-edged one at that. But in the current economic climate, that edge is sharper than ever. Elevated interest rates, persistent

inflation, pressured supply chains, and volatile currencies have placed many companies in a position where the question is no longer whether to refinance—but whether they still can.

Are We Already Seeing the Signs of a Restructuring Wave?

Over the past months, we’ve witnessed a silent uptick in corporate defaults, urgent refinancing talks, and creditor friction. Some cases are headed for litigation. Others are being settled quietly behind closed doors. But most share a common denominator: a lack of forward-looking legal planning when the debt was first structured.

This is exactly where corporate debt restructuring comes into play. Companies that took on low-rate financing in 2021 or 2022 are now staring down maturities they can’t roll over. Others, with dollar-denominated debt and local currency revenues, are watching devaluations destroy their repayment capacity. In this scenario, legal readiness isn’t just reactive—it’s preventative.

What Legal Red Flags Should Companies Watch For?

From a legal perspective, there are several critical red flags companies should never overlook when managing corporate debt. One major warning sign is acceleration clauses triggered by breached financial covenants. These clauses allow lenders to demand immediate repayment if a company fails to meet certain financial targets or conditions. When triggered unexpectedly, they can put enormous pressure on a company’s cash flow and solvency.

Another common issue involves outdated loan terms that no longer align with the current economic environment. For example, agreements signed before recent spikes in interest rates or inflation may have conditions that are unrealistic or harmful under today’s circumstances. Such terms can limit a company’s flexibility in negotiating adjustments or refinancing.

Security interests—legal claims lenders hold on company assets as collateral—also require careful documentation. Poorly documented or unclear security interests can lead to disputes over which creditors have priority during debt enforcement or restructuring. This uncertainty can increase legal costs and delay resolutions.

Furthermore, debt collection actions that escalate without early communication between parties often signal trouble. When companies or creditors fail to engage in timely dialogue, small issues can spiral into aggressive legal battles, costly litigation, or forced insolvency proceedings.

These are warning signs that a company may soon need to begin debt restructuring. Ignoring them only narrows the window for action.

How Do Lenders Add Pressure When Markets Shift?

Then there’s the human side: pressure from international creditors, distressed funds, or banks looking to restructure on their own terms. In such situations, companies without a legal strategy risk being caught between opposing interests, expired timelines, and vulnerable assets.

That’s why we believe debt management is not just a financial discipline—it’s also a legal one. And it needs to start long before a default is on the table. Reviewing default triggers, renegotiating covenants before they are breached, structuring enforceable guarantees, and preparing preemptive exit strategies—such as out-of-court settlements or protective filings—can be the difference between weathering a storm and being capsized by it.

What Is Corporate Debt Restructuring in Practice?

Corporate debt restructuring is the process where a company renegotiates the terms of its outstanding debt to improve cash flow, avoid default, or stabilize its operations during periods of financial difficulty. It goes beyond simply adjusting interest rates or extending payment deadlines. The legal framework behind the debt agreements plays a crucial role in determining how successful the restructuring will be.

Effective debt restructuring aims to create flexibility in the company’s capital structure, allowing it to better manage its obligations while continuing normal business operations. Achieving this balance requires careful legal planning and foresight. It is not something that can be handled last minute or through improvised measures. Instead, it involves strategic adjustments to loan terms, guarantees, and creditor agreements to protect the company’s long-term viability.

How Do Jurisdictions Like Mexico, Brazil, or Argentina Complicate the Picture?

In jurisdictions like Mexico, Brazil, or Argentina—where cross-border lending is common—the complexity increases. Can a creditor enforce a U.S.-based security interest against a Latin American company? What happens when the arbitration clause points to London, but the assets are in São Paulo? Is it possible to shield operating entities from hostile creditor actions in multiple jurisdictions?

These aren’t abstract questions anymore. They are real, urgent, and increasingly expensive. The solution isn’t improvisation at the edge of insolvency. It’s building resilient legal frameworks from the outset—something that should be considered part of any debt strategy from day one.

Why Is Now the Time to Rethink Debt Structuring?

Debt, when structured wisely, remains a powerful tool for growth. Mishandled, it becomes a quiet liability that can explode without warning. The best time to act is not when the crisis hits—but when there’s still room to make decisions that are both strategic and legally sound.

Understanding what corporate debt restructuring is and implementing it early can help companies avoid more painful outcomes down the road.

If your company is facing legal questions around refinancing, creditor pressure, or debt restructuring in Latin America, Saltiel Law Group can help. Our team has deep experience navigating complex cross-border debt issues and can help you design a legal strategy before problems escalate.

Call Saltiel Law Group today to schedule a confidential consultation. Acting early can make all the difference.

About Hubert “Hubie” Menendez

Hubert “Hubie” Menendez is a Senior Associate at Saltiel Law Group, where he concentrates on Business and Commercial Litigation, including matters involving corporate debt restructuring. With more than seven years of legal experience, Hubie has a proven track record of managing complex disputes and delivering favorable outcomes for clients.His notable litigation successes include negotiating a high-stakes corporate settlement that preserved a multi-million-dollar enterprise, as well as helping secure a $2 million verdict in a prominent fraud case. Hubie regularly advises clients on strategic solutions to financial and operational challenges, including corporate debt restructuring, breach of contract, and shareholder disputes. Hubie earned his J.D. from Florida International University College of Law, where he was a recipient of the CALI Excellence Award in Real Estate Transactions and consistently earned placement on the Dean’s List. He also holds a B.B.A. in Finance from FIU. He is admitted to practice in Florida state and federal courts, as well as before the Trademark Trial and Appeal Board.