Restructuring cases are cash, covenants, and time. Positive EBITDA with six weeks of cash is still a filing risk. This is not a normal profitability case with a stern tone.
Last full pass: 24 August 2026.
AlixPartners, A&M, FTI, McKinsey RST, and the Big Four turnaround practices interview the way the work runs: 13-week cash, borrowing base, and “what can we do by Friday.” If the company is a going concern with a fat cash pile and a margin problem, you might still use a profitability tree — but you must prove liquidity first. Distressed manufacturers overlap operations and supply chain; leveraged property companies overlap real estate. The distinctive skill is not mixing accrual profit with cash.
What you are deciding
- Runway: weeks of cash, including revolver availability, not just the bank balance.
- Stabilization: what to stop paying (with legal advice in real life; in a case, name the tradeoffs).
- Operational vs financial restructuring: plant closures vs amend-and-extend vs equitization.
- Fiduciary frame: in the zone of insolvency, the case answer should mention creditors, not only shareholders.
Clarify in-court vs out-of-court. Clarify what is already drawn on the ABL. Clarify whether EBITDA adds back the items that are still cash (consulting fees, overdue freight). Ask who has blocked accounts / springing dominion, and whether critical vendors are already on COD. A structure that starts with “revenue / cost” without a liquidity bucket will sound like strategy intern theatre to an RST interviewer.
Open in this order, out loud: cash on hand → availability → weekly burn → covenants already tripped → then operations. If you reverse it, you will recommend a 12-month footprint redesign for a company that may miss payroll in week seven.
Exhibits you should expect
| Exhibit | Use |
|---|---|
| 13-week cash forecast | The primary document. Receipts vs disbursements. |
| Borrowing base (AR, inventory advance rates) | Availability ≠ facility size. Ineligibles matter. |
| Covenant schedule (leverage, FCCR, minimum liquidity) | Tripwires. |
| Aging (AR, AP) | Stretching AP is a choice with vendor shutdown risk. |
| EBITDA vs cash bridge | WC, capex, interest, taxes, one-offs. |
Units that trip people
EBITDA vs cash. Maintenance capex, interest, and WC unwind can make cash negative when EBITDA is positive.
Liquidity vs cash. Cash + undrawn availability (borrowing base minus drawn minus reserves).
Runway in weeks, not “we’ll be fine this year.”
Claim types (in a later round): first lien, second lien, unsecured. Do not run a DCF as if equity still owns the optionality without asking.
Practice a restructuring liquidity case
Run a scored case where EBITDA is positive and the 13-week cash is not.
Worked mini-case: $38m EBITDA, six weeks of oxygen
Prompt. ForgeCast shows $38m EBITDA. Cash $14m. Weekly cash burn $2.1m (interest, maintenance capex, WC). ABL: 85% of $48m eligible AR → borrowing base $40.8m, drawn $37.0m, availability $3.8m. Leverage covenant 4.5×; current 5.1× (case inputs). A strategy intern recommends “10% SG&A cut” as the plan. Are they right?
Math. Liquidity = 14.0 + 3.8 = $17.8m. At $2.1m/week, runway ≈ 8.5 weeks if burn is stable — and burn often rises when vendors tighten terms. Covenant is already blown (5.1 > 4.5); the bank can call the ABL. A 10% SG&A cut, even if $6m annualized, is ~$0.12m/week and takes months to hit cash. It does not solve an 8-week problem or a covenant default.
Recommendation. Liquidity first: (1) covenant waiver / forbearance this week, (2) 13-week cash with a receipts sprint (collect AR, stop non-critical capex), (3) borrowing-base hygiene (ineligible AR, appraisals on inventory), (4) only then a plant-level cost program. Do not pay a dividend, a bonus, or a related-party note. Flag vendor-critical SKUs so AP stretch does not stop the line. Risk: springing lockbox once you default. Next exhibit: 13-week cash and a list of critical vendors.
What a generic profitability tree misses here
- Time is measured in weeks. Annual margin trees are the wrong clock.
- Credit documents bind the feasible set. You cannot “invest to grow out of it” if the ABL is in default.
- Working capital is the business in distress: AR, inventory, AP.
- Add-backs can make EBITDA a fiction.
- Stakeholder map (lenders, vendors, employees, sponsors) is the implementation plan.
If you answer ForgeCast like a classic profit case, you will cut SG&A 10% and miss the covenant. If you answer it like a finance NPV case, you will DCF a firm that may not be a going concern in 60 days.
See where you stand on a restructuring case
Practice liquidity, borrowing base, and the EBITDA-vs-cash bridge.
Related guides
- Operations case interview
- Supply chain case interview
- Finance case interview guide
- Profitability framework
CoachNed is independent and unaffiliated with McKinsey, BCG, Bain, or other firms named for interview-style practice. Cases on CoachNed are AI-simulated.