5 Technical Questions Asked in RX Consulting Interviews

Went through RX Co interviews some time ago. Didn't get the offer but made a note of a couple of technical questions I got asked. Hopefully someone finds this helpful. Would say these are upper end of easy to moderate questions, based on the other questions I got asked, personally. Note that this is for a FT analyst / consultant role, so not intern.

A company is expected to reorganize with an enterprise value of 420 at emergence.
Capital structure (all at par, pre‑reorg):

• Revolver (super‑senior secured, fully drawn): 60
• First lien term loan: 220
• Second lien notes: 180
• Unsecured notes: 200
• Cash: 20

Assume:

• Cash is fully available to creditors (no minimum cash).
• No administrative or other claims.

1. Compute total value available to financial creditors.
2. Show the recovery waterfall by class and compute recovery % for:
   • Revolver
   • First lien
   • Second lien
   • Unsecureds
3. If unsecureds are out‑of‑the‑money in this base case, at what enterprise value (holding everything else constant) would unsecured notes start to receive a non‑zero recovery?

A distressed company has:

• Current EBITDA: 80
• Net debt: 400
• Current EV/EBITDA: 5.0x
• Distressed trading implies equity is nearly worthless.

Management presents a 3‑year turnaround plan:

• EBITDA grows to 110 by Year 3.
• Net debt is reduced to 320 by Year 3 through cash generation and minor asset sales.
• The market EV/EBITDA multiple is expected to re‑rate from 5.0x to 6.5x if the plan is achieved.

Assume that in a restructuring, creditors are trying to decide whether to take mostly equity in the reorganized company or push for a quick sale at today’s value (5.0x on 80).

1. Compute:
   • Today’s implied enterprise value and equity value.
   • Year 3 implied enterprise value under the plan.
2. Under the Year 3 scenario, compute:
   • Net debt to EBITDA
   • Implied equity value
3. From a creditor’s perspective, explain (quantitatively) why they might be willing to accept equity today instead of pushing for an immediate sale, and identify at least one key risk that could undermine this logic.

A company has:

• Debt: $300M
• EBITDA: $50M
• Trades at 5.0x EV

A restructuring converts $150M of debt into equity.

Question:

• What is pro forma leverage?
• How does this affect equity ownership and creditor incentives?

A distressed company is approaching a maturity wall with a fragmented capital structure: multiple tranches of secured and unsecured debt, and a revolving credit facility with a group of lenders holding different exposure sizes.

Question:
How would you assess which creditor group has the most negotiating leverage, and what specific structural features (e.g., lien priority, voting thresholds, intercreditor agreements) would you analyze to determine who can effectively block or force a restructuring outcome?

A distressed borrower has:

• Beginning debt: 500
• Interest rate: 10%
• EBITDA: 70
• Depreciation: 10
• Cash taxes: 0

In Year 1, the company elects to PIK 40% of its interest and pay 60% in cash.

1. Calculate:
   • Total interest expense
   • Cash interest paid
   • PIK interest
2. Show the impact on:
   • Net income
   • Cash from operations (simplified)
   • Ending debt balance at year‑end
3. Briefly explain why PIK can help short‑term liquidity but worsen the capital structure over time.