Restructuring Case Interview: Framework, Turnaround Strategy, and Worked Examples (2026)

A restructuring case asks you to protect cash, diagnose the root cause, and sequence operational or financial actions by liquidity urgency. In the illustrative retail example below, the modeled levers bridge about $103M of a $138M operating-profit gap.

The 4-Phase Restructuring Framework

This guide uses an illustrative sequence: diagnose, stabilize, restructure, and reposition. Set the pace from the case's liquidity deadline and root cause rather than importing fixed timing bands.

The single most important number is cash runway (Cash on hand / Monthly burn = Months remaining). Compare it with the next debt maturity and minimum operating-cash requirement to set the urgency.

Restructuring Case Framework

1. 01

   Diagnose. Root cause analysis: what is declining, why, and how fast?

2. 02

   Stabilize. Stop the cash bleed and buy time within the case's liquidity window

3. 03

   Restructure. Fix operations, the balance sheet, or both

4. 04

   Reposition. Return to growth on a sound foundation

13-week runway and debt worksheet

Fill this before recommending layoffs, divestitures, refinancing, or growth investment:

Static practice prompt: if opening cash is $30M, weekly net burn is $1M, minimum operating cash is $8M, and a $20M maturity falls in Week 10, show when usable liquidity runs out and name the first action you would test. This checks whether your sequence follows the cash constraint rather than a memorized turnaround order.

Phase 1: Diagnose

Before proposing any fix, diagnose across three dimensions: financial health, operational efficiency, and external context. Ask for revenue trend, cash position and burn rate, debt maturities, and working capital metrics (DSO, DPO, inventory turns).

Assess the cost structure against company history, case-provided peers, or a dated industry source; also examine capacity utilization and which product lines are cash drains. Determine whether decline is company-specific or industry-wide.

• Financial: Revenue trend, cash runway, debt load, interest coverage ratio
• Operational: Fixed/variable cost ratio, capacity utilization, revenue per employee
• External: Industry dynamics, competitive position, regulatory or macro disruptions

Phase 2: Stabilize

Stabilization buys time using a rolling cash-flow forecast over the case's liquidity horizon. Quantify spending freezes and receivables actions from the case's own data rather than universal savings and timing bands.

Medium-term actions can target unprofitable locations and non-revenue headcount; estimate savings and timing from explicit case assumptions.

Phase 3: Restructure

Once cash flow is stabilized, apply structural fixes. A case may require operational restructuring, financial restructuring, or both. Sequence the actions according to liquidity urgency, root cause, and stakeholder constraints.

Operational restructuring fixes the business: supply chain consolidation, SKU rationalization based on case profitability data, process automation, organizational flattening, and channel strategy revision.

Financial restructuring fixes the balance sheet: debt-for-equity swaps, covenant amendments, asset divestitures, equity injections, and refinancing at lower rates.

Operational vs. Financial: Decision Framework

Understanding which type of restructuring to prioritize is critical for structuring your answer. Use the signals in the case prompt to determine your focus. When both high leverage and operational inefficiency exist, sequence the actions from the case's liquidity deadline; operational fixes cannot wait if the business is broken, but a near-term maturity may require financial action in parallel.

Most interview cases signal the type through specific data points: cost ratios point to operational restructuring, while debt metrics point to financial restructuring.

Worked Example: Retail Turnaround

Prompt: A department store chain (85 locations, $1.2B revenue, down from $1.5B over 3 years) has operating margins of -4% (from +6%). Debt: $180M with a $45M maturity in 8 months. Cash: $30M. Burn rate: $4M/month. Design a turnaround plan.

Diagnosis: Revenue declined 20% ($300M loss) driven by e-commerce competition. Operating profit swung $138M (from +$90M to -$48M). Fixed costs unchanged across 85 locations. Same-store sales fell 12% while 10 new stores were added. Cash runway: ~7.5 months, tight against the 8-month debt maturity.

Stabilization (0-90 days): Close 20 worst stores (bottom quartile by contribution margin, saving $60M/year in fixed costs). Freeze $25M in planned capex. Reduce corporate headcount 15% ($12M SG&A savings). Liquidate inventory in closing stores ($20M cash in 60 days). Engage creditors to extend the $45M maturity by 24 months.

Restructuring (3-12 months): Cut 30% of underperforming SKUs, focus on private-label brands. Launch e-commerce ($8M investment, targeting 15% of revenue by month 18). Negotiate debt-for-equity swap converting $60M debt to equity (saving $4.8M/year interest).

Synthesis: "I recommend a 3-phase turnaround. First, stabilize by closing 20 stores and freezing capex, generating $20M in immediate cash and $72M in annual savings. Second, restructure by rationalizing SKUs, launching e-commerce, and converting $60M of debt to equity. Third, reposition the remaining 65 stores as experiential retail with strong private-label programs. The $103M improvement closes 75% of the $138M gap. Primary risk: creditor willingness to accept the debt-for-equity swap."

Advanced Tips for Restructuring Cases

Distinguish between cyclical decline (market downturn, commodity spike) and structural decline (business model disruption). Cyclical problems need cost flexing and financial bridges. Structural problems need fundamental business model change.

• Sequence by speed-to-impact: Immediate (spending freeze) before quick wins (headcount) before medium-term (supplier renegotiation) before long-term (transformation)
• Flag 2-3 risks proactively: "Closing 20 stores risks alienating loyal customers; I would transition them to e-commerce"
• Coordinate operational and financial actions: sequence them from liquidity urgency, root cause, and stakeholder constraints

Related Guides

• Profitability Framework: foundation for diagnosing revenue vs. cost problems
• Cost Reduction Case Interview: the core stabilization lever in Phase 2; cost reduction and restructuring share the same cost tree
• Revenue Decline Case Interview: most restructuring cases begin with a revenue diagnosis to confirm whether the crisis is demand-driven or cost-driven
• Break-Even Analysis Case Interview: cash runway and break-even load factor are the two quantitative anchors of any restructuring recommendation
• M&A Case Framework: relevant for divestitures or distressed acquisitions
• Scale vs. Profitability Case Interview: the strategic decision that precedes restructuring: did the company scale too fast before its unit economics were sound?

Sources (checked June 17, 2026)

• PrepLounge, restructuring and turnaround cases: preplounge.com/en/management-consulting-cases/restrukturierung
• Management Consulted, restructuring consulting overview: managementconsulted.com/restructuring-consulting
• Corporate Finance Institute, types of corporate restructuring: corporatefinanceinstitute.com/resources/management/what-is-corporate-restructuring
• Firms Consulting, turnaround and restructuring insights: firmsconsulting.com/turnaround-restructuring