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Cancellation of debt income (COD income)
Cancellation of debt (COD) income is a term used in the US to describe the accounting windfall that comes from the reduction in a company's liabilities as a result of completing a debt exchange. The concept can be an important one for the loan market, since this income can sometimes be included in a company's calculations of ebitda. This means that a company that has carried out a debt exchange may gain greater flexibility under its debt-to-ebitda loan covenants.
