How do you manage the conflicting interests of different stakeholder groups (e.g., equity holders, senior lenders, trade creditors) when advising a distressed company that needs a consensual restructuring?
An advanced Restructuring question — expect it in final rounds and case-heavy interviews (IB, PE, Big-4 Transaction Services).
THE SHORT ANSWER
First, I map each stakeholder's economic and strategic interests: equity wants to retain value, senior lenders want full repayment, trade creditors want continued business. I then use the fulcrum security analysis to identify which class has the most leverage. Communication is key: I hold separate and joint meetings to explain the company's situation and the implications of non-consensual options (like insolvency). I propose a restructuring plan that offers the fulcrum class equity as an incentive, while offering senior lenders a combination of cash and new debt, and trade creditors a compromise with improved payment terms. Transparency and fairness are critical to build trust and avoid litigation.
WHAT INTERVIEWERS LISTEN FOR
- ✓Map stakeholder interests
- ✓Identify fulcrum class
- ✓Propose tailored solutions
- ✓Transparent communication
COMMON MISTAKES
- ✗Favoring one group without justification
- ✗Ignoring trade creditors' influence
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