In case of impending bankruptcy, restructuring debts and even granting some debt forgiveness could be the best option for creditors that expect to recoup their investment. To estimate the amount of debt that should be paid and the amount that should be forgiven, secure computation is used to securely compute on the private information of all the parties involved, incentivising them to truthfully disclose their true valuations.
One one side, the first creditor inputs his expected recovery value from the assets of the debtor in case of bankruptcy:
And on the other side, the second party inputs his expected recovery value from the assets of the debtor in case of bankruptcy:
After the secure computation is done, all parties will know if debtor continues being solvent, the payments to both creditors from the debtor and the amount of debt forgiveness granted.
For more information, check our publication: “JUBILEE: Secure Debt Relief and Forgiveness“.
NOTE: for the converse problem (the millionaire’s problem), please read the page about the Millionaire’s Problem.
The preceding is just a simplified example for illustrative purposes. In the real world, you will have to provide parameters for your specific situation.