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In this session, we will focus on troubled debt restructuring, specifically on modifying loan terms as an alternative to settling debt. We will explore how loan modifications work under two scenarios: when the undiscounted future cash flows are less than the carrying value of the debt, and when they exceed it. Troubled debt restructuring involves creditors granting concessions to debtors under non-standard circumstances. This situation often arises in industries like construction, as seen during the 2007-2008 real estate crash. Previous sessions covered the basic concepts of troubled debt restructuring and settling debt.