What Does a Restructuring Consultant Actually Do?

I wrote a short newsletter piece about RxCo and since it keeps coming up on this site figured I'd share. If you have any questions about the space or any feedback, feel free to share. Would appreciate both.

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It’s a Sunday night after a relaxing weekend, and you receive an email from one of your managing directors. A new deal is kicking off tomorrow, and you’ll be boots on the ground in Cleveland for a manufacturing company. Its lenders have imposed a new block on its ABL, and the sponsor doesn’t think there’s enough liquidity to get through the month.

These are the exact scenarios where restructuring consultants are needed. The space is known for its bankers and lawyers, but there’s another group of professionals needed to effectuate a restructuring: a group that can stabilize the business, manage liquidity, and ensure there’s enough runway to reach a transaction, whether that’s a sale process, an LME, or a Chapter 11 filing.

The textbook version is a tidy division of labor: lawyers handle process and legal risk, bankers handle capital and deal execution, and consultants handle the business and its cash. In practice the lines blur constantly. Bankers can't run a process without a credible forecast, and that forecast is usually something the consultants build with management.

The consultant’s role is to establish the company’s financial and operating reality, extend its runway where possible, and help translate a restructuring strategy into an executable business plan. In a liquidity-driven situation, the first priority is building a detailed 13-week cash flow forecast. This establishes how much liquidity the company has and at its core answers the most important question: how much time do we have?

Building the model itself is usually not the hardest part. The harder part is getting comfortable with the assumptions behind it: which receipts are actually likely to hit, which payments can be pushed without creating vendor issues, and where management’s expectations may be too optimistic. The forecast will never be perfect, but it needs to be reliable enough to establish how much time the company has and where the pressure points are.

Once the liquidity position has been established, the next priority is identifying near-term levers to extend the runway. These actions are often industry-specific, but common examples include accelerating collections, factoring receivables, stretching payables, renegotiating vendor terms, reducing inventory purchases, or liquidating slow-moving inventory. Each lever comes with trade-offs. Stretching a critical vendor, for example, may preserve cash today but result in COD or cash-in-advance terms on future orders, creating another liquidity challenge down the road. The objective, though, is the same: preserve cash and create more time for a broader solution.

The third priority is determining what a viable go-forward business looks like. In a situation like this, the team may evaluate near-term cost savings, product and customer profitability, workforce reductions, and the company’s operating footprint. The goal is to right-size the business and build a credible go-forward plan as the company is taken to market.

As these analyses are underway, the team will typically build a robust operating model that captures the EBITDA and cash impact of each initiative, including when the benefits are expected to be realized and any costs required to implement them. The model becomes the foundation for evaluating potential sale, financing, and restructuring scenarios, and ultimately determining what the go-forward business can support.

These workstreams put restructuring consultants at the crossroads of finance and traditional consulting. The day-to-day work includes building models, assessing financial performance and liquidity, and identifying strategic levers that can be pulled. That combination of technical analysis and problem-solving is what drew me to the career.

Technical ability alone is not enough. These situations are stressful, the stakes are high, and nearly every stakeholder wants something different. Success requires tact in how information is communicated because every stakeholder has different incentives. Sponsors and lenders may both be asked to put more money in, and each can be reluctant for different reasons. A sponsor may have already funded several liquidity shortfalls and be questioning whether additional equity can preserve any remaining value. Lenders, meanwhile, have to decide whether providing more capital protects their recovery or simply puts more money at risk. Each party enters the room with different objectives, which means the same information often needs to be communicated differently depending on the audience. Few areas of finance require as much EQ as restructuring.

All of this usually happens on a condensed timeline, inside a company without clean processes or reporting systems, surrounded by people who are scared, defensive, or in denial for entirely understandable reasons. And that’s really what makes restructuring different. A healthy business has room for error. A missed forecast can be managed, an underperforming business line can be addressed over time, and a difficult decision can often wait until next quarter. A distressed business doesn’t have that luxury. Every dollar of liquidity matters, timelines are measured in weeks or days, and decisions that would normally take months may need to be made overnight.

Restructuring consulting isn’t just finance applied to a harder problem. It’s helping a business operate through one of the most consequential periods of its existence, often with imperfect information, limited time, and stakeholders whose interests are not always aligned.