BOOKS

An excellent book on how to properly organize the work on restructuring and management of distressed assets in a bank.

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From approaches to structuring assets (including the creation of a Bad Bank) to planning the work of professional teams and managing assets of various types owned by the Bank. The only nuance is that the section of the book about commercial real estate is so-so. Therefore, it is better to skip it.

The author worked at Lehman Bros., then consulted clients privately. Interestingly, I did not find any other books or publications by this author. His website listed in the book (www.distresseddebtservicing.com) is now down.

Perhaps the most informative book on the most common tools of financial and operational restructuring and their effectiveness.

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Restructuring is often written and spoken of as a kind of panacea for companies in crisis, while omitting details – either as a matter of course or as secret knowledge. And when they do talk about details, they usually rely on isolated examples from their own practice, extending them to all crisis situations. Such generalizations help some consultants to sell their services, but in most cases are very dangerous to repeat in practice as they are made on the basis of single examples. It's like with homeopathy –  it helps someone,  someone doesn't. For a sustainable result, it is better to rely on evidence-based medicine.

 

The author, a partner at  Oliver Wyman, has collected an impressive database of restructurings of companies from the USA, Germany and the UK (151 examples of restructuring). Based on this base, the author analyzes the statistically significant relationships between the restructuring tools used and the result. Moreover, not only the restructuring tool itself is analyzed, but also the time of its application (at the beginning of restructuring or at later stages), as well as the degree of influence (the main tool or auxiliary).

 

Many of the conclusions of the study may seem trivial to professionals. For example, "change of management" is a tool that must be used at the very beginning of restructuring. If the company's management is changed in a crisis at later stages of the process, the effect will be significantly less significant. And the conversion of debt into equity should be carried out only as the final element of restructuring, not earlier. However, in real life situations, we often act from the prevailing circumstances, opportunistically, which ultimately does not contribute to the success of restructuring. The author offers us a toolkit of restructuring, the effectiveness of which has been statistically proven. In fact, this book is a practical guide to effective restructuring.

 

For this book, the author received the Schmalenbach Prize in  2009, which is awarded for outstanding developments in the field of economics.

The book "Corporate Financial Distress, Restructuring, and Bankruptcy" by Edward I. Altman, Edith Hotchkiss, and Wei Wang is an essential resource for professionals in corporate restructuring and finance. Its fourth edition reflects decades of expertise in distressed finance, high-yield bonds, and bankruptcy prediction models, including Altman's renowned Z-Score model.

 

The text blends theory with practical applications, offering tools to evaluate financial distress, conduct valuations, and navigate both in-court and out-of-court restructurings. Chapters on leveraged finance, distressed debt investing, and international insolvency regimes make this book a global reference. Its case studies and statistical insights highlight how restructuring strategies evolve, focusing on maximizing asset value and sustaining operational viability.

 

Key practical aspects include:

1. Distress Prediction Models: Updated methodologies for assessing default risks, crucial for restructuring planning.

2. Asset and Financial Restructuring Strategies: Detailed frameworks for improving operational efficiency and optimizing capital structures.

3. Legal Insights: Summaries of bankruptcy processes under different jurisdictions, aiding cross-border restructuring efforts.

4. Valuation Techniques: Tools for appraising distressed entities, including real-world examples.

 

This volume is indispensable for academics, practitioners, and policymakers, bridging scholarly rigor with actionable strategies for restructuring. A must-read for anyone navigating the complex landscape of financial distress and corporate turnaround.