Credit analysis fundamentals
Leverage ratios, coverage ratios, free cash flow to firm, and how to assess whether a company can service its debt.
RX Interview Guide
Restructuring Interview Prep 2026
Restructuring interviews test a different skill set than traditional IB. Credit analysis, distressed valuation, and bankruptcy mechanics replace the standard M&A playbook.
01 / UNDERSTAND THE CONTEXT
Why restructuring interviews are different
Restructuring (RX) groups at banks like Houlihan Lokey, Lazard, PJT Partners, and Evercore evaluate candidates on credit fundamentals, not just equity valuation. You need to understand how debt works, what happens in a default, and how to think about recovery value.
The best RX candidates combine strong technical skills with genuine interest in distressed situations. Interviewers want to see that you can analyze a capital structure, identify where value breaks, and articulate a restructuring thesis clearly.
Core topics you must know
RX interviews cover these areas consistently.
Distressed valuation
How enterprise value is allocated through the capital structure in a restructuring — the fulcrum security concept.
Bankruptcy process (Chapter 7 vs. 11)
DIP financing, the automatic stay, plan of reorganization, cramdown provisions, and the absolute priority rule.
Restructuring alternatives
Out-of-court workouts, exchange offers, amend-and-extend, and when each is preferable to a Chapter 11 filing.
02 / BUILD YOUR APPROACH
How to prepare step by step
A structured approach to RX interview prep.
- 1
Build credit analysis foundations
Master leverage, coverage, and liquidity metrics. Understand how covenants work and what triggers a default.
- 2
Learn the restructuring process
Study Chapter 11 mechanics, DIP financing, and how plans of reorganization are structured and voted on.
- 3
Practice distressed valuation
Work through fulcrum security analysis, liquidation analysis, and recovery waterfall exercises.
- 4
Follow real restructuring cases
Study recent cases (Hertz, J.Crew, Revlon) to discuss intelligently. Know who advised, the outcome, and recovery rates.
- 5
Prepare RX-specific behavioral answers
Articulate why restructuring specifically — not just 'I like complex situations.' Show genuine interest in credit and distressed investing.
03 / SEE IT IN PRACTICE
Common RX interview questions with analysis
These are the questions that separate prepared candidates from the rest.
Walk me through a restructuring
The question
A company defaults on its debt. Walk me through what happens next.
Strong answer approach
Start with out-of-court options, explain when Chapter 11 becomes necessary, cover DIP financing, and walk through the plan of reorganization process methodically.
Weak answer signal
Jumping straight to 'they go bankrupt' without discussing the spectrum of restructuring options.
What is the fulcrum security?
The question
How do you determine the fulcrum security and why does it matter?
Strong answer approach
Explain it as the security where value breaks in the capital structure — the class that converts from debt to equity. Walk through a simple waterfall example.
Weak answer signal
Giving a textbook definition without demonstrating you can actually calculate it.
Why restructuring over M&A?
The question
You could work in any IB group. Why restructuring?
Strong answer approach
Articulate genuine interest in credit analysis, complex multi-stakeholder negotiations, and the intellectual challenge of distressed situations. Reference specific cases.
Weak answer signal
Generic answers like 'I want complex deals' without showing you understand what makes RX specifically different.
Common mistakes in RX interview prep
Avoid these mistakes before interviews.
- Focusing only on equity valuation and ignoring credit analysis entirely
- Not understanding the difference between Chapter 7 and Chapter 11
- Being unable to explain DIP financing or the automatic stay
- Having no opinion on recent restructuring cases
- Treating the 'Why RX?' question as an afterthought
Go Deeper
Finance Technical Interview Guide
300+ frequency-tagged questions across 8 core topics, including advanced valuation and complex accounting scenarios tested in restructuring interviews.
- Every concept tagged by interview frequency
- 30-second + 3-minute answer formats
- Red flag warnings for common mistakes
- Practice problems with worked solutions
Instant PDF download. Updated for 2026.
Frequently asked questions
How different are RX interviews from standard IB interviews?
Significantly different. While standard IB interviews focus on DCF, M&A, and LBO, RX interviews emphasize credit analysis, distressed valuation, bankruptcy mechanics, and capital structure analysis. The behavioral questions also differ — they want to understand why you're specifically drawn to distressed situations.
Which firms are best for restructuring?
Top RX advisory practices include Houlihan Lokey (largest by deal count), Lazard, PJT Partners, Evercore, Moelis, and Rothschild. Among bulge brackets, Goldman Sachs and Morgan Stanley have strong RX groups. Each has a different culture and deal mix.
Do I need to know restructuring before applying?
You don't need deep expertise, but you should understand the basics of credit analysis, the Chapter 11 process, and why restructuring interests you. Showing genuine preparation and interest matters more than encyclopedic knowledge.
What are the exit opportunities from restructuring?
RX bankers have strong exit options into distressed debt funds, special situations investing, turnaround consulting, and direct lending. Many also stay in RX banking long-term, as the work tends to be more intellectually stimulating and counter-cyclical.
Preparing for a restructuring interview?
Review the technical foundations before interviews.
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