Reprise-The Five Phases of Restructuring

This chapter reviews the key themes from Volume I—Corporate Debt Restructuring in the Emerging Markets: A Practical Post-Pandemic Guide (Palgrave Macmillan 2021). A workout is always a bespoke transaction. It unfolds against the background of its own factual circumstances. In an emerging market, these facts will be driven by the unique macroeconomic, political, and business/cultural nature of the given market. Human emotions will usually play a greater role in debt restructurings than in (most) other financial service transactional areas. The characteristics of the emerging markets create the potential for higher losses which drive behavioral patterns that complicate the restructuring process. The restructuring specialist must therefore develop superior (if not super-human) communication, persuasion, organizational, and process skills. Based on work in prior restructurings, the process is broken down into five identifiable main phases and this gives the restructuring specialist an excellent framework for understanding and managing the complexities of an emerging markets workout. These are: (1) Pre-Restructuring; (2) Restructuring Decision; (3) Case Setup; (4) Structuring and Negotiation; and (5) Implementation. The antecedents, objectives, and challenges of each of these five are discussed in turn.