Haircut defined:┬áIn financial terms, the term “haircut” is usually slang for a creditor (like a bondholder) receiving less than the amount he is owed. The term often comes up for example when a highly leveraged company in an LBO can’t keep making the payments on its bonds. As part of a negotiated restructuring package, the bondholders may be asked to “take a haircut”, say by receiving only 90 cents for every dollar owed in exchange for some other concession by company (such as a higher interest rate, a piece of the company’s equity etc.) A “haircut” may also be forced on creditors and bondholders in Chapter 11 Bankruptcy proceedings (see PrivCo definition).

Above is a definition for “Haircut” from PrivCo’s Private Company Knowledge Bank, the definitive online and e-book guide to private companies and private company deals.

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