A restructuring of debt constitutes a troubled debt restructuring ("TDR") if the creditor for economic or legal reasons related to the debtor’s financial difficulties grants a concession to the debtor that it would not otherwise consider (see ASC 310-40-15-5). Usually, a loan modified in a troubled debt restructuring will have already been identified as impaired under ASC 310-10-35 and will continue to be accounted for under that guidance; therefore, TDR accounting does not impact the impairment accounting. However, the creditor should apply the provisions of ASC 310-10-35 to a TDR, even if a loan is excluded from the scope of that guidance because it is part of a large group of smaller-balance homogeneous loans that are collectively evaluated for impairment under ASC 450-20. If the restructuring is considered a TDR, creditors are required to make certain disclosures in their financial statements. See ARM 3560.4 for further discussion on TDRs.

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