Adjustment Bond Law and Legal Definition

Adjustment bond is a bond issued by a corporation during a restructuring phase. Adjustment bonds are created with the permission of the bondholders. These bonds are usually issued when the company meets with bankruptcy issues and not able to make payments on the previous bonds. An adjustment bond can turn beneficial for the company as it helps to avoid bankruptcy. It can also be beneficial to bondholders in a long term basis. In other words, adjustment bond is a recapitalization of the outstanding debt obligations of the company that is accomplished by adjusting the terms. Adjustment bonds are also known as reorganization bond.