# Restructuring Model Build a restructuring model for distressed situations with weekly liquidity tracking, multi-tranche debt waterfall analysis, and scenario comparisons across turnaround, workout, and liquidation outcomes. - Canonical: https://finamodel.com/templates/restructuring-model - Excel download: https://finamodel.com/templates/restructuring.xlsx - Category: Corporate Finance - Model type: Valuation - Difficulty: Advanced - Audiences: Bankers & advisors, Credit & risk, Distressed investors, Lenders, Advisors, Workout specialists - Tags: restructuring, distressed-debt, debt-for-equity, covenant-relief, recovery ## Overview Model debt restructuring scenarios with maturity extensions, interest rate reductions, and covenant relief, comparing recovery outcomes across investor classes in out-of-court and bankruptcy contexts. This template allows builders to define current debt structure (maturity, coupon, terms), propose restructuring scenarios (maturity extensions to 5–10 years, coupon reductions, covenant resets), and calculate cash flow impact post-restructuring. The waterfall allocates cash recovery by creditor seniority (secured lenders, unsecured bondholders, equity). The workbook contains a debt schedule showing current and restructured terms with new amortisation profiles, a cash flow projection showing the path to debt service capability under the restructured terms, and recovery waterfall calculations. The model produces IRR and return multiple outcomes for each creditor class, showing value creation/destruction from the restructuring relative to liquidation. It handles equity wipeout scenarios and haircut assumptions, calculates time-to-recovery (years until restructured debt is fully repaid), and enables sensitivity analysis on revenue recovery and opex normalization. Target users are restructuring advisors, distressed debt investors, creditor committees, bankruptcy courts, and workout specialists evaluating restructuring feasibility and creditor recovery prospects in the $100M to $5B+ debt range. ## What's included - 13-week cash flow forecast with weekly variance tracking - Capital structure waterfall with DIP financing priority - Creditor recovery analysis by seniority - Operational turnaround plan with EBITDA bridge - Enterprise value sensitivity and liquidation analysis - Current debt structure and covenant compliance status - Restructuring scenarios with maturity extensions and term outs - Interest rate and coupon reduction assumptions - Covenant reset and amendment terms - Cash flow allocation and waterfall post-restructuring - Recovery analysis and value creation by investor class ## Restructuring Model: Creditor Treatment, Operating Forecast and Recovery Analysis This restructuring model template illustrates how a distressed company's creditor treatment, exit debt and five-year operating turnaround connect. It evaluates debt reduction, liquidity, coverage and proposed recoveries across five creditor classes. The underlying workbook details annual forecasts, a liquidation waterfall and a sensitivity grid, giving readers a structured view of plan recovery and reorganisation outcomes. ### Key Operating and Treatment Inputs The template’s Assumptions tab collects the primary drivers for the restructuring model. It starts with LTM financials and five creditor classes: first-lien term debt, first-lien notes, second-lien notes, unsecured bonds and trade/other claims. - Each class has a haircut percentage plus equity-conversion and cash-paydown percentages. Reinstated debt is calculated as claim times (1 minus haircut) times (1 minus equity percentage minus cash percentage). - DIP and exit debt terms, equity funding, tax/NOL parameters, annual revenue growth, expense ratios, working-capital days and covenant thresholds are also entered here. Annual revenue grows from LTM revenue, and COGS, SG&A and other operating expenses use revenue-based ratios, so the operating forecast reacts to revenue assumptions. These inputs feed the restructuring bridge and the five-year forecast, allowing a reader to trace how creditor treatment choices influence later debt, coverage and recovery outcomes. Calculation summary: ```text Reinstated debt = claim × (1 − haircut) × (1 − equity percentage − cash percentage) ``` ### Calculation Flow Through Debt and Financial Statements The model’s calculation flow begins when Assumptions feed the Pre_Restructuring bridge, which produces exit debt and CODI. From there, the Debt_Schedule calculates senior debt amortisation, DIP amortisation, revolver interest and total debt. - Senior interest uses average opening and closing debt, while DIP repays a fixed original-principal/tenor amount. The Income_Statement, Cash_Flow and Balance_Sheet tabs then build a five-year operating forecast. - Debt interest feeds earnings, while earnings and working-capital movements feed cash and the balance sheet. NOL usage is limited by positive taxable income, the utilisation percentage, opening NOL and an equity-value-times-rate limit. The Cash_Flow reverses noncash CODI and includes receivable, inventory and payable movements. Finally, Recovery_Analysis and the Dashboard read these schedules to present plan recoveries and a summary comparison of pre-petition and post-emergence debt, leverage, blended recovery, liquidity runway, new equity and projected operating results. ### Outputs for Recovery and Scenario Comparison The template’s main outputs focus on creditor recoveries and liquidity. Recovery_Analysis provides a sequential liquidation waterfall that distributes available assets after administrative costs, alongside plan recoveries by class and reorganised equity ownership. - A recovery sensitivity grid changes the final-year EBITDA margin and EV/EBITDA multiple, showing a simplified recovery ratio rather than rerunning the full creditor waterfall. The Dashboard summarises pre-petition versus post-emergence debt, leverage, blended recovery, liquidity runway, new equity and projected operating results. - Checks cover balance, liquidity, sources and uses, debt, covenants, NOL and liquidation comparison tests. These outputs let a reader compare proposed creditor treatment with liquidation outcomes and review the annual forecast across the implemented period from 2026 to 2030. The sensitivity grid is deliberately simplified and does not replace the detailed waterfall. ### Practical Use and Documented Limitations This restructuring model is designed for evaluating distressed situations where creditor treatment, exit debt and a five-year operating turnaround need to be considered together. A reader can trace how haircuts, equity conversions and cash paydowns affect reinstated debt, how DIP and exit facilities influence interest and coverage, and how plan recoveries compare with liquidation. - However, the template has documented limitations. The senior schedule has no maturity balloon: amortisation stops after the input tenor even if debt remains, and the revolver draw stays constant. - It does not promise automatic refinancing, cash sweeps or calculated time to full repayment. Sources and uses balance through a cash plug, opening cash in Cash_Flow does not incorporate that plug, and first-year reorganised equity is also a balancing plug. - Pre-petition and forecast leverage use different definitions (net versus gross debt/EBITDA). DSCR adds tax back to the numerator instead of deducting cash tax, overstating coverage when tax is payable. - Tax calculations are simplified, opening inventory and payables are zero in the cash bridge, and year-one D&A uses the LTM amount. Sample rates and values are illustrative, not market benchmarks. Recovery treatment is input-driven; the workbook does not establish legal priority, plan approval or actual creditor investment IRRs. ## Built for distress situations Use this model when a business faces liquidity pressure, covenant breaches, or formal restructuring proceedings and you need to show creditors a credible plan. ## Structured around real restructuring workflows A useful restructuring model needs weekly cash visibility, claim priority logic, and scenario analysis that reflect how turnaround mandates actually work. ## Better for creditor negotiations This gives you the transparency and detail that lenders, advisors, and courts require instead of a high-level operating model that hides short-term liquidity risk. ## Built for distress situations Use this model when a business faces liquidity pressure, covenant breaches, or formal restructuring proceedings and you need to show creditors a credible plan. ## Structured around real restructuring workflows A useful restructuring model needs weekly cash visibility, claim priority logic, and scenario analysis that reflect how turnaround mandates actually work. ## Better for creditor negotiations This gives you the transparency and detail that lenders, advisors, and courts require instead of a high-level operating model that hides short-term liquidity risk. ## Features - **Multiple scenario modeling:** Compares in-court (Chapter 11), out-of-court exchanges, and refinancing paths to show recovery outcomes. - **Covenant and liquidity analysis:** Tracks covenant status pre- and post-restructuring to show relief timing and headroom improvements. - **Recovery waterfall and IRR:** Models distributions to each creditor class to show recovery percentages and distressed investor returns. ## Use cases - **Distressed M&A and asset purchases:** Value targets under different restructuring outcomes to support take-private or debt-for-equity conversion decisions. - **Lender exchange offer analysis:** Model creditor recovery under proposed new terms to evaluate fairness and assess acceptance likelihood. - **Equity recovery and equity roll-forward scenarios:** Analyze equity holder recovery in restructuring to support negotiation of equity roll-forward terms. ## Frequently asked questions ### What is a restructuring model? It is a financial model used in distressed situations to forecast near-term liquidity, analyse creditor recoveries, and compare turnaround versus liquidation outcomes. ### What should a restructuring model include? It should include a 13-week cash flow forecast, debt waterfall, recovery analysis, operational improvement assumptions, and enterprise value sensitivity. ### Who uses restructuring models? Restructuring advisors, distressed debt investors, chief restructuring officers, investment bankers, and lenders use them during workout and insolvency situations. ### What is a 13-week cash flow? It is a weekly cash forecast covering roughly three months, used to track near-term liquidity, identify peak funding needs, and monitor covenant compliance during distressed periods. ### Can it compare in-court and out-of-court scenarios? Yes. The model is designed to compare different resolution paths including consensual workouts, formal reorganisation, and asset liquidation. ## Related templates - [Distressed Debt Analysis](https://finamodel.com/templates/distressed-debt-model) - [Leveraged Buyout Model](https://finamodel.com/templates/lbo-model) - [Mezzanine Debt Funding Model](https://finamodel.com/templates/mezzanine-debt-model)