Part I Corporate Debt Restructuring, 3 Out-of-Court vs Court-Supervised Restructurings

This chapter looks at the advantages and disadvantages of out-of-court workouts in both the US and UK. It starts by looking at the reasons for which companies seek reorganization relief. When considering the advantages, it shows how in many instances an out-of-court workout may be a more efficient method of debt restructuring than a court-supervised bankruptcy proceeding. The chapter then looks at the considerations that are fundamental to the workout process, irrespective of the restructuring process that a debtor might choose. It also considers typical out-of-court approaches. Successful execution of an out-of-court restructuring begins with an analysis of the debtor’s business. Such analysis should identify the specific problems that led to the necessity of a restructuring and should address the company’s financial prospects on a realistic basis.