An advantage of a troubled debt restructuring compared with a bankruptcy reorganization is that it almost always results in a greater forgiveness of debt (reduction of the debtor's liabilities).

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A troubled debt restructuring allows for the renegotiation of terms to avoid default or bankruptcy, but it does not inherently result in greater forgiveness of debt compared to bankruptcy reorganization, where debt may be significantly reduced or restructured under court supervision.

An Advantage of a Troubled Debt Restructuring Compared with a Bankruptcy