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

Restructuring cases represent 10-15% of consulting interviews and test whether you can stabilize a distressed business where survival is at risk. Unlike a standard profitability case, the wrong sequence of actions accelerates failure. The framework: Diagnose root causes, stabilize cash flow within 90 days, restructure operations over 3-12 months, then reposition for growth.

The 4-Phase Restructuring Framework

Every restructuring case follows a predictable arc where sequencing matters more than in any other case type. You must stabilize before you restructure, and restructure before you grow. The key differentiator from generic cost-cutting: time urgency dictates every decision.

The single most important number is cash runway (Cash on hand / Monthly burn = Months remaining). If runway is under 6 months, everything else is secondary.

Framework

Restructuring Case Framework

1. 01

   Diagnose

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

2. 02

   Stabilize

   0-90 days: stop the cash bleed, buy time

3. 03

   Restructure

   3-12 months: fix operations, balance sheet, or both

4. 04

   Reposition

   12-24 months: return to growth on a sound foundation

Phase 1: Diagnose (First 5-8 Minutes)

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 (fixed vs. variable ratio vs. industry benchmarks), 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 (0-90 Days)

Stabilization buys time using a 13-week cash flow forecast. You are preventing death before the restructuring takes effect. Quick wins in weeks 1-4 include freezing discretionary spending (5-8% of SG&A savings, immediate) and accelerating overdue receivables (10-20% of AR, 2-4 weeks).

Medium-term actions in months 2-3 target unprofitable locations and non-revenue headcount (10-15% SG&A reduction, 4-8 weeks).

Phase 3: Restructure (3-12 Months)

Once cash flow is stabilized, apply structural fixes. Most turnarounds require both operational and financial restructuring. In a case interview, always address operational restructuring first — fixing a broken cost structure demonstrates stronger business judgment than proposing debt renegotiation.

Operational restructuring fixes the business: supply chain consolidation, SKU rationalization (cut bottom 20% by margin), 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, start with operational fixes to build credibility with creditors.

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"
• Address operational before financial: Creditors grant concessions when they see management fixing the underlying business

Test Your Understanding

Test yourself

1 / 3

Question 1 of 3

What is the first number you should ask about in a restructuring case?

• ARevenue growth rate
• BMarket share
• CCash position and monthly burn rate
• DDebt-to-equity ratio

Related Frameworks and Guides

• Profitability Framework — foundation for diagnosing revenue vs. cost problems
• Operations and Cost Framework — operational efficiency analysis for the restructuring phase
• M&A Case Framework — relevant for divestitures or distressed acquisitions
• Case Interview Frameworks Complete Guide — all major frameworks in one reference
• Growth Strategy Cases — the reposition-for-growth phase draws on growth strategy thinking
• Case Interview Examples — practice cases including turnaround scenarios

Sources (checked March 20, 2026)

• PrepLounge, restructuring and turnaround cases: preplounge.com/en/management-consulting-cases/restrukturierung
• CaseBasix, turnaround case interview frameworks and examples: casebasix.com/pages/turnaround-case-interview-frameworks
• Management Consulted, restructuring consulting overview: managementconsulted.com/restructuring-consulting
• CaseBasix, restructuring consulting — how experts drive recovery: casebasix.com/pages/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