Restructuring: advising on the liabilities when the money runs short

Two kinds of restructuring¹

Operational restructuring works on the asset side - cutting costs, selling divisions, fixing processes - and is consultants' work. Financial restructuring works on the liability side - renegotiating with banks, swapping debt for equity, negotiating a write-down - and is the investment bank's. Both aim to make the company viable; a real case usually needs both.

Busiest when everyone else is quiet¹

When the economy turns, M&A dries up and restructuring fills up: companies and private equity portfolio companies run into their debt, and need someone to stop a crisis becoming an insolvency. The business is counter-cyclical - it moves in waves opposite to the rest of the bank.

Restructuring is its own discipline^2,3

Restructuring works on companies that cannot service their debt, and the skills - bankruptcy law, capital structure, negotiating between creditor classes - are specialised enough that coverage bankers contribute little beyond comparables and buyer lists. The top of the table is an advisory firm, not a lender: Houlihan Lokey reports itself first globally in LSEG's 2025 distressed debt and bankruptcy restructuring rankings.

It overlaps with M&A¹

Many restructurings include a distressed sale - finding a buyer for a company close to insolvency, or selling off units to raise cash - so restructuring and M&A teams work closely, and the valuation tools are the same.

A lender cannot be the neutral adviser¹

A bank that lends, underwrites bonds and trades shares will often be one of the creditors in a large restructuring, so it cannot mediate between the company and its creditors. Even without a loan outstanding, it would have an incentive to solve the problem with its own products. Neither the company nor the other creditors would accept that, so the mandates go to advisers with nothing but advice to sell.

Debtor side and creditor side¹

A debtor-side adviser steers the company through the process. A creditor-side adviser represents lenders or bondholders - valuing their claims and making sure a write-down or a debt-for-equity swap does not shortchange them. The creditor side is often harder: several creditors with different interests have to be brought to one position, and whatever one class gains, another pays for.

Who they are, and how the field consolidated^3-6

The specialists are few. PJT Partners is Blackstone's former advisory business, including its restructuring practice, spun off in October 2015; Miller Buckfire, a restructuring specialist, has been part of Stifel since December 2012; Greenhill, an M&A and restructuring adviser, became part of Mizuho in December 2023. Houlihan Lokey reports itself first in LSEG's 2025 restructuring rankings.

Chapter 11 in the US⁷

Chapter 11 is reorganisation: the company usually stays in control as "debtor in possession" and proposes a plan that sorts claims into classes. A class accepts when creditors holding two-thirds of the amount and more than half of the claims vote in favour. New money can come in with court-approved priority over other unsecured creditors - debtor-in-possession financing, which restructuring bankers raise.

The UK restructuring plan⁸

The Corporate Insolvency and Governance Act 2020 added the restructuring plan, in Part 26A of the Companies Act 2006. Each class needs 75% by value of those voting, and the court can bind a dissenting class - a cross-class cram-down - if its members are no worse off than in the relevant alternative and at least one class that is in the money has approved.

StaRUG in Germany⁹

Since 1 January 2021 German companies can restructure outside insolvency proceedings under the StaRUG: creditor classes approve a plan by qualified majority, and dissenting classes can be overruled by cross-class cram-down under set conditions. Before it, Germany had no equivalent of the English scheme.

The modelling gets harder¹

A restructuring model has to carry haircuts, debtor-in-possession financing and the effects of the insolvency regime on top of the capital structure, so the technical bar for analysts and associates is high. Case law and the practice of the courts involved matter too.

A small field with few seats¹

Restructuring is not more sought-after than other groups - many students have never heard of it - but it is small, so entry-level places are scarce. At many banks you cannot apply for it directly: analysts are staffed from the pool onto restructuring work and, with luck, specialise over time.

Specialised skills are hard to take elsewhere²

Restructuring and special situations teams, which often include distressed M&A, build skills that are hard to use on ordinary healthy companies. That is an argument for the group if distressed investing is where you want to end up, and against it if you are unsure.

The exits are specialist ones¹

The technical and legal skills lead to private equity and above all to special situations and distressed debt funds, which want exactly the ability to value a company in trouble and read its capital structure.

It takes a particular temperament¹

Restructuring bankers are pragmatic problem-solvers dealing with people in the worst week of their careers - a chief executive whose company may not survive. Anyone who cannot sit calmly through that will find the work very stressful.