# Restructuring

> Corporate restructuring and turnaround advisory. USE THIS SKILL when the user asks about restructuring, turnaround, distressed company, 13-week cash flow, liquidity crisis, creditor negotiation, Chapter 11, administration, insolvency, debt restructuring, operational restructuring, covenant breach, going concern, liquidation analysis, viability assessment, creditor committee, DIP financing, forbearance, or quick-win operational improvements. Also trigger when asked about a company running out of cash, defaulting on debt, or needing emergency financial intervention.

- Skill: `kaakati/restructuring` (Agent Skill)
- Install (CLI): `npx skillmds@latest add kaakati/restructuring`
- Raw SKILL.md: https://api.skillmd.com/api/skills/kaakati/restructuring/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: Kaakati (https://skillmd.com/u/kaakati)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/kaakati/restructuring

---


# Corporate Restructuring & Turnaround

## Required Inputs

- **Company Overview**: Name, industry, revenue, headcount, and corporate structure.
- **Nature of Distress**: Liquidity crisis, overleveraged balance sheet, operational underperformance, or combination.
- **Urgency Level**: Weeks of cash remaining (critical if <8 weeks); upcoming debt maturities or covenant test dates.
- **Capital Structure**: All debt tranches (senior secured, unsecured, mezzanine, convertibles), equity, and intercompany obligations.
- **Key Stakeholders**: Identity of major creditors, equity holders, management team, key customers, and key suppliers.

## Execution Steps

### 1. Triage Assessment

Before anything else, determine the severity and time horizon:

| Indicator | Green (Stable) | Amber (Stressed) | Red (Distressed) | Score |
|---|---|---|---|---|
| Cash runway | >6 months | 3-6 months | <3 months | |
| Debt maturity | >12 months | 6-12 months | <6 months | |
| Covenant compliance | In compliance | Waiver needed this quarter | Already in breach | |
| EBITDA trend | Growing | Flat or declining <10% | Declining >10% YoY | |
| Customer concentration | Top 5 <30% revenue | Top 5 = 30-50% revenue | Top 5 >50% revenue | |
| Supplier risk | All stable | 1-2 at risk | Key supplier threatening COD/termination | |
| Management capacity | Strong team | Gaps in key roles | CEO/CFO departure or capability gap | |
| Stakeholder alignment | Aligned | Some tension | Active creditor conflict | |

**Scoring**: Green=1, Amber=2, Red=3. Total score 8-12 = Stressed (proactive restructuring). 13-18 = Distressed (urgent restructuring). 19-24 = Critical (immediate intervention, formal proceedings likely).

### 2. 13-Week Cash Flow Model

The 13-week cash flow (TWCF) is the foundational tool for any restructuring. It tracks weekly liquidity on a receipts-and-disbursements basis.

#### Model Structure

| Line Item | Week 1 | Week 2 | Week 3 | ... | Week 13 | Total |
|---|---|---|---|---|---|---|
| **Opening cash balance** | | | | | | |
| **Receipts** | | | | | | |
| Customer collections | | | | | | |
| Other receipts | | | | | | |
| **Total receipts** | | | | | | |
| **Disbursements** | | | | | | |
| Payroll and benefits | | | | | | |
| Rent and occupancy | | | | | | |
| Raw materials / COGS | | | | | | |
| Utilities | | | | | | |
| Insurance | | | | | | |
| Professional fees | | | | | | |
| Tax payments | | | | | | |
| Interest payments | | | | | | |
| Debt amortization | | | | | | |
| CapEx (critical only) | | | | | | |
| Other disbursements | | | | | | |
| **Total disbursements** | | | | | | |
| **Net cash flow** | | | | | | |
| **Closing cash balance** | | | | | | |
| Revolver availability | | | | | | |
| **Total liquidity** | | | | | | |
| **Minimum cash threshold** | | | | | | |
| **Liquidity surplus / (deficit)** | | | | | | |

**Critical rules for the 13-week model**:
- Cash basis only (when cash moves, not when revenue is recognized).
- Weekly granularity (not monthly; weekly matters in distress).
- Bottom-up build from AP aging, AR aging, payroll register, and committed payments.
- Identify the **liquidity trough** (lowest point) and the week it occurs.
- Model a **stress case** (10-20% haircut on collections, acceleration of payables).

Use the `financial-modeling` skill for detailed projection model construction when extending beyond 13 weeks.

### 3. Stakeholder Mapping

Map every stakeholder by their economic interest and leverage:

| Stakeholder | Claim ($M) | Priority | Security | Leverage | Current Posture | Strategy |
|---|---|---|---|---|---|---|
| Senior secured lender(s) | | 1st priority | [Collateral description] | High (can enforce) | [Supportive/Neutral/Hostile] | [Approach] |
| Second lien / mezzanine | | 2nd priority | [Collateral description] | Medium | | |
| Unsecured creditors | | General unsecured | None | Low individually; high collectively | | |
| Bondholders | | Per indenture | Per indenture | Depends on indenture trustee | | |
| Trade creditors (key) | | General unsecured | None | Operational leverage (supply disruption) | | |
| Pension fund / employees | | Priority per jurisdiction | Statutory | Regulatory and political | | |
| Equity holders | | Residual | None | Low in distress; Board control | | |
| Management team | | N/A | N/A | Operational knowledge | | |
| Key customers | | N/A | N/A | Revenue concentration | | |

#### Fulcrum Security Analysis

Identify the fulcrum security (the most senior class of capital that is impaired):

```
Enterprise Value (going concern)   = $[X]M
Less: Senior secured debt          = ($[A]M)  --> Fully covered? [Y/N]
Remaining value for junior claims  = $[B]M
Less: Second lien / mezzanine      = ($[C]M)  --> Fully covered? [Y/N]
Remaining value for unsecured      = $[D]M
Less: Unsecured claims             = ($[E]M)  --> Recovery = [D/E x 100]%
Equity value                       = $[F]M    --> (often $0 in distress)
```

The fulcrum security holder has the most influence in restructuring negotiations.

### 4. Restructuring Options Analysis

Evaluate each option systematically:

| Option | Description | Pros | Cons | Best When |
|---|---|---|---|---|
| **Operational restructuring** | Cost reduction, revenue improvement, working capital optimization | Preserves enterprise; no creditor impairment | Slow; may be insufficient if leverage is the problem | Operational underperformance with manageable debt |
| **Out-of-court financial restructuring** | Consensual debt renegotiation (amend & extend, covenant relief, debt-for-equity swap) | Faster; lower cost; less stigma; management retains control | Requires unanimous or supermajority creditor consent; holdout risk | Limited number of creditor groups; alignment achievable |
| **Pre-packaged bankruptcy** | Agreement reached pre-filing; Chapter 11 for confirmation only | Speed of out-of-court + binding on all via court | Filing stigma; customer/supplier disruption risk | Complex capital structure but deal achievable pre-filing |
| **Chapter 11 / Administration** | Court-supervised restructuring with automatic stay | Binds all creditors; DIP financing available; contract rejection | Expensive; slow; management may lose control; value destruction | Hostile creditors; complex multi-party negotiation; need for automatic stay |
| **363 Sale** | Asset sale under bankruptcy court supervision | Clean break; highest value to secured creditors | Operating business may lose value in process | Liquidating value > going-concern under current ownership |
| **Liquidation (Chapter 7)** | Orderly wind-down and asset disposition | Defined end point | Maximum value destruction; job losses | Going-concern value < liquidation value |

#### Option Scoring

| Criterion (weight) | Operational Restructuring | Out-of-Court | Pre-Pack | Chapter 11 | 363 Sale | Liquidation |
|---|---|---|---|---|---|---|
| Value preservation (25%) | | | | | | |
| Speed to resolution (20%) | | | | | | |
| Stakeholder support (20%) | | | | | | |
| Cost of process (15%) | | | | | | |
| Business continuity risk (10%) | | | | | | |
| Management control (10%) | | | | | | |
| **Weighted total** | | | | | | |

Score each 1-5. Recommend the highest-scoring option with contingency plans.

### 5. Viability Assessment Framework

Determine if the business is viable as a going concern:

| Viability Test | Assessment | Evidence |
|---|---|---|
| **Core business profitability** | Is the core business EBITDA-positive (excluding distress costs)? | Adjusted EBITDA analysis stripping out restructuring charges, non-recurring items |
| **Market position** | Does the company have a defensible market position? | Market share, competitive moats, customer switching costs |
| **Cash flow generation** | Can the business generate positive operating cash flow post-restructuring? | Projected UFCF under restructured cost base |
| **Capital structure sustainability** | Can a restructured balance sheet support the business? | Debt / EBITDA <4x post-restructuring; interest coverage >2x |
| **Management capability** | Is the management team capable of executing the turnaround? | Track record, gaps, need for CRO or interim management |
| **Stakeholder support** | Will key stakeholders (creditors, customers, employees) support the plan? | Creditor discussions, customer retention indicators, employee sentiment |

**Conclusion**: Viable / Conditionally viable (with specific changes) / Not viable as going concern.

If not viable as a going concern, proceed directly to liquidation analysis.

### 6. Going-Concern vs. Liquidation Analysis

| Asset / Value Component | Going-Concern Value | Orderly Liquidation Value | Forced Liquidation Value |
|---|---|---|---|
| Enterprise value (DCF or multiple-based) | $___M | N/A | N/A |
| Real estate / facilities | [Included in EV] | $___M (appraised) | $___M (distressed sale) |
| Equipment and machinery | [Included in EV] | $___M (auction value) | $___M (scrap value) |
| Inventory | [Included in EV] | $___M (50-80% of book) | $___M (20-40% of book) |
| Accounts receivable | [Included in EV] | $___M (80-90% of book) | $___M (60-75% of book) |
| Intellectual property | [Included in EV] | $___M (if separable) | $___M (if any) |
| Goodwill / workforce | [Included in EV] | $0 | $0 |
| **Total value** | $___M | $___M | $___M |
| Less: Priority claims (admin, DIP, wages) | ($___M) | ($___M) | ($___M) |
| Less: Secured claims | ($___M) | ($___M) | ($___M) |
| Less: Wind-down costs | N/A | ($___M) | ($___M) |
| **Available for unsecured creditors** | $___M | $___M | $___M |
| **Unsecured recovery rate** | ___% | ___% | ___% |

**Decision rule**: If going-concern value > orderly liquidation value, restructuring is justified. Present this analysis to creditors to build support for the restructuring plan.

### 7. Creditor Negotiation Strategy

| Negotiation Element | Strategy | Rationale |
|---|---|---|
| **Forbearance agreement** | Request [X]-month standstill on enforcement while plan is developed | Buys time; prevents value-destructive acceleration |
| **DIP / new money** | Seek $[X]M DIP facility from [existing lenders / new source] | Fund operations during restructuring; priming lien if in Chapter 11 |
| **Amend and extend** | Extend maturities by [X] years; reduce amortization | Matches debt service to cash flow capacity |
| **Covenant relief** | Waive [specific covenants] for [X] quarters; reset at [new levels] | Avoids technical default while business stabilizes |
| **Debt-for-equity swap** | Convert $[X]M of [tranche] to equity at [X]% ownership | Reduces leverage; aligns creditors with recovery |
| **Haircut / write-down** | Reduce principal by [X]% on [tranche] | Only when liquidation analysis proves impairment |
| **Interest reduction** | Reduce cash interest; PIK toggle for [X] quarters | Preserves cash for operations |
| **Asset sales** | Sell non-core assets to repay $[X]M of secured debt | Reduces debt; demonstrates good faith |

**Key principle**: The restructuring plan must leave every creditor class at least as well off as in liquidation (the "best interests" test in Chapter 11).

### 8. Operational Improvement Quick-Wins

Immediate actions to stabilize and improve cash flow:

#### 30-Day Quick-Wins (Emergency Cash Preservation)

| Action | Expected Cash Impact ($M) | Implementation Effort | Owner |
|---|---|---|---|
| Freeze all discretionary spending | $___M saved | Low | CFO |
| Halt non-critical CapEx | $___M saved | Low | COO |
| Accelerate AR collections (call past-dues, offer discounts for early payment) | $___M accelerated | Medium | Treasury |
| Extend AP (negotiate 30-day extensions with non-critical suppliers) | $___M deferred | Medium | Procurement |
| Reduce inventory (halt new orders, liquidate excess) | $___M freed | Medium | Supply Chain |
| Implement weekly cash reporting (13-week model) | Visibility | Low | CFO |
| Renegotiate or terminate non-essential contracts | $___M saved | Medium | Legal |

#### 60-Day Quick-Wins (Cost Structure)

| Action | Expected Annual Savings ($M) | Implementation Effort | Owner |
|---|---|---|---|
| Headcount reduction (eliminate redundant roles, contractors first) | $___M | High | CHRO |
| Facility consolidation (close underutilized sites) | $___M | Medium | COO |
| Procurement renegotiation (top 10 vendors by spend) | $___M | Medium | Procurement |
| Pricing review (eliminate unprofitable products/customers) | $___M (margin improvement) | Medium | Sales/Finance |
| SG&A rationalization (travel, marketing, subscriptions) | $___M | Low | All |

#### 90-Day Quick-Wins (Revenue and Margin)

| Action | Expected Revenue/Margin Impact ($M) | Implementation Effort | Owner |
|---|---|---|---|
| Customer profitability analysis (exit unprofitable accounts) | $___M margin improvement | Medium | Sales/Finance |
| Pricing increases on inelastic products/services | $___M revenue uplift | Medium | Sales |
| Sales force effectiveness (reallocate to highest-value accounts) | $___M pipeline improvement | Medium | Sales |
| Working capital optimization (DSO/DPO/DIO targets) | $___M cash flow improvement | Medium | Treasury |
| Supply chain optimization (supplier consolidation, logistics) | $___M cost reduction | High | Supply Chain |

### 9. Restructuring Plan Summary Framework

The final restructuring plan must address:

| Plan Component | Content | Status |
|---|---|---|
| **Business plan** | 3-5 year projections under restructured operations | |
| **Capital structure** | Pro forma balance sheet post-restructuring; target leverage ratios | |
| **Stakeholder treatment** | Recovery waterfall for each creditor class and equity | |
| **Operational changes** | Cost reductions, revenue initiatives, management changes | |
| **Liquidity** | Sources and uses of cash through restructuring; DIP or new money terms | |
| **Implementation timeline** | Key milestones from plan approval through emergence | |
| **Governance** | Board composition, management team, reporting requirements | |
| **Monitoring** | KPIs, covenant package, reporting cadence to creditors | |

## Output Template

```markdown
## Restructuring Assessment: [Company Name]

**Date**: [Date] | **Urgency**: [Green/Amber/Red] | **Cash Runway**: [X] weeks

### Situation Overview
[Nature of distress, key triggers, immediate risks]

### Triage Assessment
| Indicator | Status | Score |
|---|---|---|
| Cash runway | [Status] | [1/2/3] |
| Debt maturity | [Status] | [1/2/3] |
| ... | | |
| **Total** | | **[X]/24** |

### 13-Week Cash Flow Summary
| Metric | Value |
|---|---|
| Opening cash | $[X]M |
| Total 13-week receipts | $[X]M |
| Total 13-week disbursements | ($[X]M) |
| Liquidity trough (week [X]) | $[X]M |
| Closing cash (week 13) | $[X]M |
| Stress case trough | $[X]M |

### Capital Structure and Stakeholder Map
| Stakeholder | Claim ($M) | Priority | Posture | Strategy |
|---|---|---|---|---|
| ... | | | | |

### Fulcrum Security
[Waterfall analysis identifying the fulcrum security]

### Viability Assessment
[Assessment of each viability criterion with conclusion]

### Going-Concern vs. Liquidation
| Scenario | Total Value ($M) | Unsecured Recovery |
|---|---|---|
| Going concern | $[X]M | [X]% |
| Orderly liquidation | $[X]M | [X]% |
| Forced liquidation | $[X]M | [X]% |

### Recommended Restructuring Path
[Selected option with rationale and scoring]

### Creditor Strategy
[Negotiation approach for each creditor class]

### Operational Quick-Wins
#### 30-Day (Cash Preservation)
[Actions with expected cash impact]

#### 60-Day (Cost Structure)
[Actions with expected savings]

#### 90-Day (Revenue and Margin)
[Actions with expected impact]

### Restructuring Plan Outline
[High-level plan components with timeline]

### Key Risks
| Risk | Impact | Mitigation |
|---|---|---|
| ... | | |
```

## Quality Checks

- [ ] Triage assessment completed with scoring across all 8 indicators to classify severity (Stressed / Distressed / Critical).
- [ ] 13-week cash flow model built on a receipts-and-disbursements basis with weekly granularity (not monthly).
- [ ] Liquidity trough identified (the worst week) along with a stress case scenario.
- [ ] Stakeholder map covers all creditor classes, equity, management, key customers, and key suppliers with claim amounts and priority.
- [ ] Fulcrum security identified through a waterfall analysis of going-concern value vs. claims.
- [ ] All restructuring options evaluated (operational, out-of-court, pre-pack, Chapter 11, 363 sale, liquidation) with scoring.
- [ ] Viability assessment explicitly concludes whether the business is viable as a going concern.
- [ ] Going-concern value compared to both orderly and forced liquidation values with recovery rates for unsecured creditors.
- [ ] Creditor negotiation strategy tailored to each creditor class with specific asks (forbearance, amend/extend, haircut, etc.).
- [ ] Operational quick-wins organized into 30/60/90-day categories with dollar-value estimates and named owners.
- [ ] Restructuring plan addresses all 8 required components (business plan, capital structure, stakeholder treatment, operational changes, liquidity, timeline, governance, monitoring).
- [ ] Cross-reference: `financial-modeling` skill used or referenced for the 13-week cash flow model and business plan projections.