If Hugh Osmond’s flotation of life assurer Pearl Group is preceded by a debt-for-equity swap then tough negotiations will be in order. Debt-laden companies have so far had limited success in restructuring their balance sheets by swapping debt for equity because it remains a last resort for most banks.

Andrew Wilkinson, head of European restructuring at Goldman Sachs, said there are generally two scenarios in which a company is likely to get its creditors to agree to swap debt for equity. First, if a company needs new capital, but investors will only provide it if some debt is written off. Or second, if a company faces administration because it cannot continue with its current level of debt.