FTI Restructuring R1 interview

Based on the most helpful WSO content, here’s how you can prepare for a Restructuring Round 1 (R1) interview effectively:

Key Areas to Focus On:

1. Understand Debt Structures:

   • Differences between Senior Debt, Junior Debt, Mezzanine, and Quasi-Equity.
   • Familiarize yourself with SFA (Senior Facility Agreement), JFA (Junior Facility Agreement), and Intercreditor Arrangements.

2. Loan Documentation Basics:

   • Key terms like acceleration, enforcement, permitted payments, payment restrictions, standstill provisions, Events of Default (EoD), and Material Adverse Change (MAC).
   • Understand provisions like equity cure that prevent an EoD.

3. Financial Covenants:

   • Grasp positive financial undertakings and how terms like Net Debt, EBITDA, Debt Service, Interest Due, and Cash Flow are calculated in documentation.

4. Triggers of Restructuring:

   • Be clear on what initiates restructuring, such as liquidity issues, covenant breaches, or maturing debt.

5. Market Metrics:

   • Know what metrics restructuring bankers monitor, such as loan pricing on Markit, HY bonds, YTM on Bloomberg, and platforms like Capital IQ or Debtwire.

6. Restructuring Concepts:

   • Value break analysis.
   • Basic understanding of Scheme of Arrangement, CVA (Company Voluntary Arrangement), and Pre-packs.
   • Vanilla Debt-for-Equity Swaps.

7. Debt Modeling:

   • Be comfortable with modeling debt, including cash interest, PIK (Payment in Kind), accrued interest, margin ratchets, repayment schedules, and cash sweeps.

Recommended Resources:

• Stephen Moyer's "Distressed Debt Analysis": Offers a solid overview of bankruptcy systems and debt mechanics.
• Houlihan Lokey Case Studies: Provides practical insights into restructuring scenarios.

Practice Tips:

• Be ready to explain concepts under pressure, such as why bond prices fall in a rising rate environment or the impact of increasing depreciation on financial statements.
• Practice explaining technical concepts clearly and concisely, as this will likely be tested.

Good luck with your interview! If you need further clarification on any of these points, feel free to ask.

Sources: https://www.wallstreetoasis.com/forum/investment-banking/how-to-prepare-for-restructuring-technical-questions?customgpt=1, How to Prepare for Restructuring Technical Questions, Superday Advice From a Tired Interviewer