Introducing Our Restructuring Investment Banking Guide

Introduction

Restructuring is the most technically demanding product group in investment banking, the most counter-cyclical, and the most consistently misunderstood by candidates targeting M&A or PE by default. Most candidates know the headline firms (Houlihan Lokey, PJT Partners, Lazard, Moelis, Evercore, Rothschild, Guggenheim, Perella Weinberg) and the headline idea that RX bankers work on bankruptcies, but the daily work, the technical depth, the role on the deal team, the difference between debtor-side and creditor-side mandates, and the very specific interview testing pattern are areas where most candidates show up underprepared. The result is the same pattern that played out in ECM coverage: candidates who would be great fits for RX either steer away from it because they do not understand the role, or interview poorly when they do because they prepared for M&A and assumed the same playbook would work.

We built the new Restructuring Investment Banking Guide to close that gap. Nine sections cover the restructuring landscape and team architecture, diagnosing distress and the 13-week cash flow workflow, out-of-court restructuring tools, the 2024 to 2026 liability management transaction wave that has reshaped lender-on-lender warfare, Chapter 11 mechanics end-to-end, distressed M&A and Section 363 sales, distressed valuation and the recovery waterfall, current 2025 to 2026 market intelligence anchored by First Brands and the Chapter 22 wave, and dedicated RX careers and interview prep. This post walks through what each section covers, why each one matters for candidates targeting RX at the elite boutiques and bulge brackets that staff the work, and how to use the guide for RX-specific interview prep that is structurally different from M&A interview prep.

Restructuring bankers do work that overlaps M&A in some surface ways and diverges sharply underneath. Like M&A, RX bankers run live transactions, draft client materials, and manage long working-group calls with lawyers and accountants. Unlike M&A, RX bankers spend much more time on capital structure mechanics: leverage diagnostics, covenant analysis, liquidity modeling, recovery analyses, plan-of-reorganization economics, and intercreditor negotiation. The skill set is structurally different, the deal teams are smaller, the hours profile is in a similar range to M&A (typically 80 to 100 hours per week during active mandates), and the exit paths skew toward distressed credit hedge funds, special situations groups (Apollo Hybrid Value, Oaktree, Centerbridge, Cerberus), distressed private equity, and direct lending rather than the M&A-dominant traditional buyout path.

The interview test is also different. RX interviewers expect candidates to discuss recent bankruptcy cases in depth, walk through a recovery waterfall on a hypothetical capital structure, explain why a borrower chose an uptier exchange over a drop-down financing, build a working view on a recent LMT case, and have a structured answer to "why restructuring?" that goes beyond "I like distressed investing." Candidates who walked into an RX interview having only studied DCFs and LBOs almost always struggle on these questions. The guide is built to close that gap with technical depth and current case knowledge.

The hiring side also looks different. The top RX practices hire in the dozens rather than the hundreds, recruit heavily through superdays at a smaller set of target schools, and lean more on technical screening (often including a take-home recovery model or a live LBO/recovery analysis on a hypothetical capital structure) than M&A coverage groups typically do. The bar is high for technical fluency at the analyst entry point because the work itself is technical from week one: a first-year RX analyst will build live recovery waterfalls, maintain DIP budget models, and draft sections of recovery decks within the first quarter of starting. Candidates who walk in with strong credit instincts, comfort with capital structures, and the ability to read a credit agreement with intent are visibly ahead.

Before walking through the guide, the macro context: U.S. corporate distress hit a decade-high in 2025 and looks set to continue into 2026. Bankruptcy filings rose 11% for the twelve-month period ending December 2025, according to the U.S. Courts data release. Chapter 11 filings reached a decade high on a trailing-twelve-month basis through Q3 2025, with mega-bankruptcies surging in the first half of the year. Real estate, consumer goods, and energy/industrial sectors combined for approximately 80% of all Chapter 11 filings.

The 2025 case slate is unusually heavy with marquee filings. First Brands, the automotive parts company, filed for Chapter 11 in September 2025 after a paused roughly $6 billion refinancing exposed quality-of-earnings issues and first-lien debt dropped from near-par to the 30s within weeks. First Brands was widely characterized as the most impactful U.S. bankruptcy filing of 2025. Rite Aid filed its second Chapter 11 (a "Chapter 22") on May 5, 2025, roughly eight months after emerging from its first restructuring, and closed all remaining stores by October 3, 2025. Forever 21, Joann, and a long list of mid-cap consumer, real estate, and healthcare names round out the 2025 docket.

The 2026 outlook for RX activity is mixed. The acute 2026 to 2027 maturity wall on covenant-lite loans issued in 2021 to 2023 has been substantially refinanced down through 2024 to 2025, and Moody's now projects U.S. speculative-grade defaults declining toward 3.0% by late 2026. The larger pressure has shifted to the 2027 to 2029 maturity stack, plus continued single-name and sector-driven distress in real estate, consumer, healthcare services, and tariff-exposed industrials. Liability management transactions, the dominant out-of-court restructuring tool of 2024 to 2025, are continuing to evolve as courts (especially the Fifth Circuit after Serta Simmons) reshape what creditors can do. This is the environment RX bankers walk into in 2026, and it is exactly the environment for which the guide is built.

Restructuring Investment Banking (RX)

The investment banking product group responsible for advising distressed companies, their creditors, and their lenders on out-of-court and in-court restructurings. RX mandates fall into debtor-side advisory (representing the company), creditor-side advisory (representing ad hoc lender groups, the official committee of unsecured creditors, or specific creditor classes), and special-situations advisory (claims trading, complex capital solutions). Top RX firms include the elite boutiques (PJT Partners, Houlihan Lokey, Lazard, Moelis, Evercore, Rothschild, Guggenheim, Perella Weinberg) that dominate league tables, with smaller practices at bulge brackets.

The guide opens with eight articles orienting candidates within RX. The section opener, What Restructuring Bankers Do, explains the daily work and how it differs from coverage and M&A. The single most important conceptual article in the section is Debtor-Side vs Creditor-Side Mandates, which lays out the fundamental fork that defines every RX engagement and that interviewers test for in early questions.

Other section articles cover how RX differs from M&A coverage, a league-table primer on the major RX firms (PJT, Houlihan, Evercore, Lazard, Moelis, Guggenheim, PWP), the broader RX ecosystem of banks, lawyers, turnaround consultants, and credit funds, a day in the life of an RX analyst, the workstream map of recovery decks, liquidity models, and waterfalls, and where RX teams sit across bulge brackets, boutiques, and pure-advisory shops.

Seven articles on how RX bankers (and turnaround consultants) diagnose whether a company actually needs to restructure and what flavor of restructuring is appropriate. The section starts with When Companies Need Restructuring: Triggers and Catalysts and moves into the diagnostic toolkit, covering the 13-week cash flow model, capital structure review and debt capacity analysis, covenant breaches and default triggers, liquidity crisis diagnosis, and the maturity wall where refinancing tips into restructuring.

The strategic-decision article, Out-of-Court vs Chapter 11 vs Sale, is the single highest-leverage piece in the section for interview prep, because it forces a structured answer to the most common opening question in any RX case interview: given this distressed company, what restructuring path would you recommend, and why?

Eight articles on the toolkit RX bankers deploy before resorting to a Chapter 11 filing. Out-of-court restructurings are typically faster, cheaper, and less disruptive than in-court processes, and they have grown substantially as a share of total RX activity in the LMT era. The section opens with Why Most Restructurings Start Out-of-Court and walks through the toolkit, covering amendments and waivers, forbearance agreements, distressed exchange offers, consent solicitations on public bond indentures, debt-for-equity swaps, and new-money rescue financing, closing with a framework for choosing the right tool for a specific distress situation.

For broader context on the credit instruments that show up in distressed capital structures, see the leveraged finance explainer, the debt covenants guide, and the mezzanine and preferred equity explainer.

Nine articles on the single most important development in restructuring practice over the past five years. LMTs (uptier exchanges, drop-down financings, double-dips) have reshaped how distressed companies and their sponsors raise rescue financing while subordinating non-participating lenders, and the legal and economic stakes are now in the tens of billions of dollars across active 2024 to 2026 cases. The section opens with Why Liability Management Transactions Took Over and walks through each LMT structure in depth, covering uptier exchanges, drop-down financings and the J. Crew trapdoor, and double-dip transactions.

The section's most current case coverage is the Serta Simmons Fifth Circuit ruling, which fundamentally reshaped what non-pro-rata uptier exchanges can do in 2024 and forward, with parallel case coverage on Mitel, Robertshaw, Wesco, and Incora. The economics half of the section covers LMT winners and losers, the 2024 to 2025 shift from consensual to non-consensual structures, and the cooperation agreements creditors now use to fight back.

Sixteen articles covering the full Chapter 11 lifecycle, the largest single section in the guide. The section starts with The Chapter 11 Lifecycle: Filing to Emergence, then walks through preparation (pre-filing RSAs, DIP shopping, and the three approaches of prepackaged, prearranged, and free-fall Chapter 11s), the petition and first-day motions and the automatic stay, and the financing layer anchored by DIP financing as the lifeblood of Chapter 11, DIP roll-ups, priming liens, and superpriority claims.

The middle of the section covers the constituencies (the UCC, ad hoc groups, and equity committees), the operational toolkit (executory contracts under Section 365, avoidance actions for preferences and fraudulent transfers), and the path to emergence: the plan of reorganization mechanics, the absolute priority rule and cramdown, the disclosure statement and voting process, plan confirmation and effective date, emergence and fresh-start accounting under ASC 852, and Chapter 22 and repeat filings (the section's closer, anchored to Rite Aid's 2025 filing).

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Eight articles on the distressed M&A toolkit, which sits at the intersection of RX and traditional M&A. The section opens with Why Distressed M&A Is Different and covers the in-court mechanics anchored by the Section 363 sale process and timeline, along with stalking-horse bidders and bid protections, auction procedures, and credit bidding by secured creditors, plus the out-of-court alternatives including foreclosure sales under Article 9 and ABC assignments.

The section bridges to broader M&A coverage, particularly the M&A tax structures guide that explains how the basis step-up and 338 elections interact with distressed sellers.

Eight articles on the valuation and recovery mechanics that RX analysts and associates spend most of their model-building time on. The section opens with Why Distressed Valuation Is Different and covers the premise-of-value framework (going concern versus liquidation), the recovery analytics anchored by the fulcrum security and where value breaks, par versus recovery analysis, the recovery waterfall under absolute priority, and the recovery deck RX bankers produce as the section deliverable.

The section also covers the analytical workflow specific to distress, including DCF adjustments and pitfalls under distress and claims trading as the bridge into credit hedge fund and distressed PE work.

Eight articles on the current state of the restructuring market and the major cases shaping practice. The section opener, Where the Restructuring Market Stands: 2025 Recap and 2026 Outlook, is the most heavily referenced article in the guide for interview prep because RX interviewers expect candidates to discuss current cases and current market conditions specifically.

The section covers the headline cases (the 2025 Chapter 11 surge at decade-high filings, the notable 2025 filings of First Brands, Rite Aid, Forever 21, and Joann, and the 2024 to 2025 LMT tape and cooperation era), the legal developments (the Purdue Pharma Supreme Court ruling on non-debtor releases and the Texas Two-Step controversy and bankruptcy forum shopping), the sector context across real estate, consumer, energy, and industrials, and the forward-looking 2026 outlook on default rates, sector trends, and pipeline.

This is the most time-sensitive section of the guide and is refreshed annually to reflect the latest case docket and market developments.

Fourteen articles dedicated to RX careers and interview preparation. The careers half opens with Why Restructuring: Answering the Most Important Question, the structured framework for the most common RX interview opener. Other career articles cover restructuring compensation across PJT, Evercore, Houlihan, Lazard, and Moelis, the realistic hours and culture profile, recruiting timeline and target schools, and the exit paths into distressed credit hedge funds, distressed PE and special situations (Apollo, Oaktree, Centerbridge), and lateral moves into M&A or coverage.

The interview-prep half is the most candidate-facing in the guide. The single highest-leverage piece is the RX technical question bank covering DIP, fulcrum, LMTs, and valuation, supported by dedicated walk-throughs of Chapter 11 and the recovery waterfall, the restructuring interview format article, and a piece on how to discuss recent bankruptcy cases in interviews.

Get the complete guide: Download our comprehensive 160-page PDF, access the IB Interview Guide covering all technical questions and frameworks.

The interview test for RX is structurally different from M&A and PE interviews. Reading the guide in section order is the recommended approach for candidates with a few weeks of lead time before superdays. For candidates with less time, the priority order based on what RX interviewers actually test:

1. Section 9 careers and interviewing first. This section tells you what the actual interview format looks like at each major firm and what the most common technical questions are. Read the restructuring interview format and the RX technical question bank before anything else.

2. Section 5 Chapter 11. Build a clean two-minute "walk me through Chapter 11" answer using the section articles, then drill it until it is automatic.

3. Section 7 distressed valuation. Build the recovery waterfall fluency that lets you answer "walk me through a recovery waterfall" without hesitation.

4. Section 4 LMTs. Read the section in full. Be ready to walk through an uptier exchange, a drop-down financing, and the Serta Fifth Circuit decision in two or three sentences each.

5. Section 8 market intelligence. Pick two or three current cases (First Brands is the obvious 2025 anchor) and be ready to discuss them in depth.

6. Sections 1 to 3, 6 background. Read for context. These sections give you the framework that lets you connect the others.

The guide is built to take a candidate from "I have heard of restructuring" to "I can walk through First Brands' filing, the DIP financing structure, the recovery waterfall implications, and the LMT history with confidence" in two to three weeks of focused reading.

Restructuring is the corner of investment banking where technical depth, narrative clarity, and current-case fluency converge most directly. The 2025 to 2026 environment is unusually rich, with the LMT wave, the Chapter 11 surge, the marquee First Brands and Rite Aid filings, and the legal evolution after Serta, Purdue Pharma, and the Texas Two-Step cases all creating fertile ground for both deal flow and learning material. Candidates who put in the work to develop RX fluency in 2026 will find themselves competing for seats at firms that hire in the dozens (not hundreds) and that value candidates who actually understand the work.

The career arc inside RX is also genuinely distinct. Analysts and associates who stay in restructuring build a portable skill set (credit fluency, capital structure judgment, comfort with bankruptcy code mechanics) that opens doors at distressed credit hedge funds, special-situations investing groups, distressed PE platforms like Apollo Hybrid Value and Oaktree's restructuring funds, private credit shops, and the secondary market for claims trading. Senior RX bankers (MDs at PJT, Houlihan, Lazard, Moelis, Evercore) build franchise-level relationships with the same recurring set of debtor-side counterparties and creditor groups, often advising on multiple Chapter 11s with the same set of ad hoc bondholders across years. The combination of intellectual depth, durable relationships, and counter-cyclical deal flow is what keeps the senior RX bench unusually stable compared to other groups.

The guide is the most comprehensive RX resource we have built. Read it actively (with a notebook, pulling up recent first-day declarations on EDGAR alongside the relevant guide articles), use it to structure superday prep, and revisit specific sections as you encounter cases in the financial press. For broader context on adjacent areas, see the older restructuring investment banking blog post, the distressed debt and special situations investing primer, and the private credit and direct lending explainer.

Start at the guide hub.