Darwin in the Balance Sheet
Charles Darwin did not claim that the strongest survive. He claimed that the best adapted survive. A company that cannot change when its environment changes will not survive—regardless of how strong it was yesterday.
Restructuring is forced adaptation. The organism of the enterprise receives a signal: change or die. And in that moment—only in that moment—a window opens onto transformation that would be impossible under normal conditions.
Crisis is a form of natural selection. Restructuring is the conscious response to selective pressure.
Schumpeter and Creative Destruction
Joseph Schumpeter described capitalism as a process of creative destruction—the constant dismantling of old structures so that new ones may arise. Firms collapse so that their resources may flow to where they will be better utilized.
But Schumpeter was writing about the system, not the individual enterprise. From the perspective of the owner, the employees, the business partners—destruction is not creative. It is simply destruction.
Restructuring is an attempt to halt destruction midway. To preserve what is valuable while removing what drags the enterprise down. Creative destruction without total annihilation.
Two Kinds of Death
Nietzsche distinguished between death that comes too early and death that comes too late. A company can die too early—when restructuring would have saved it, but no one undertook the effort. And it can die too late—when restructuring began too late, prolonging the agony.
Timing is everything. Too early, and restructuring is unnecessary, because problems can be solved through ordinary measures. Too late, and restructuring is impossible, because there is nothing left to save.
There is a window. It is narrow. Recognizing it requires experience.
Insolvency as Diagnosis
The law defines insolvency with precision: the loss of capacity to meet due obligations for a period exceeding three months. For legal entities, also the situation where liabilities exceed assets for twenty-four months.
This is not a verdict. It is a diagnosis.
A diagnosis opens therapeutic possibilities that were previously unavailable. Protection from enforcement. Suspension of accruing interest. A moratorium on termination of critical contracts. The chance to negotiate from a position protected by law, not from a position of desperation.
The paradox: formally acknowledging trouble provides more options than concealing it.
Game Theory in the Creditors’ Meeting
John Nash proved that in non-cooperative games, an equilibrium exists—a point at which no player can improve their position through unilateral change of strategy. The problem: Nash equilibrium is often suboptimal for everyone.
The relationship between debtor and creditors before restructuring is a non-cooperative game. Each creditor acts in their own interest: first come, first served. A race to the bailiff. Termination of contracts. Seizure of assets.
The equilibrium outcome: liquidation. Everyone receives less than they could have received through cooperation.
Restructuring transforms a non-cooperative game into a cooperative one. The arrangement is a coordination point—an agreement that gives everyone more than chaotic enforcement would. But it requires the players to stop competing and start cooperating.
This is the essence of arrangement proposals: convincing creditors that cooperation serves their interest.
Surgery, Not Cosmetics
Operational restructuring is surgery. Workforce reduction. Closing unprofitable lines. Renegotiating contracts. Selling unnecessary assets. Cuts that hurt.
Financial restructuring is a redesign of the balance sheet. Conversion of debt to equity. Installment plans for obligations. Deferred payments. Partial forgiveness of claims.
Usually both are needed. Operational surgery alone won’t help if the debt is unsustainable. Financial restructuring alone won’t help if the business model is flawed.
Proper diagnosis determines the proportions. How much scalpel, how much negotiation.
Pareto in the Claims Register
Vilfredo Pareto observed that eighty per cent of effects come from twenty per cent of causes. In restructuring, this principle operates with brutal precision: twenty per cent of creditors control eighty per cent of claims.
The creditors’ meeting is not a democracy—it is a plutocracy weighted by the size of claims. Capital votes, not persons.
The practical implication: the success of an arrangement depends on persuading the key creditors. Banks. Major suppliers. Bondholders. If they say yes, the rest doesn’t matter. If they say no, the rest won’t help.
Restructuring strategy begins with mapping: who holds how much and what do they want.
Four Paths
Arrangement approval proceedings. The simplest and fastest. The debtor collects creditor votes independently; the court approves the completed arrangement. For companies that still control their situation.
Accelerated arrangement proceedings. The court opens proceedings but without extended verification of claims. For cases where the register is uncontested.
Arrangement proceedings. Full judicial procedure. A court-appointed supervisor verifies claims. For situations where the creditor list requires ordering.
Remedial proceedings. The deepest intervention. An administrator assumes control of the enterprise. For companies requiring radical transformation under external supervision.
Each path answers a different question. How far has the situation slipped out of control? How much do creditors trust the debtor? How much time remains?
Thucydides and the Negotiation Dilemma
Thucydides recorded the Melian Dialogue: the Athenians gave Melos a choice between surrender and annihilation. The strong do what they can; the weak suffer what they must.
In restructuring negotiations, this asymmetry is illusory. Yes, a creditor can reject the arrangement. Can demand full repayment. Can bet on enforcement.
But if all creditors do so, the debtor collapses. And bankruptcy usually yields less than an arrangement. A creditor who blocks restructuring hoping for a better outcome often receives a worse one.
A sound arrangement proposal communicates this clearly: here is what you will receive under the arrangement; here is what you will receive in bankruptcy. Choose.
What We Do for Debtors
We diagnose the situation—whether restructuring is possible, necessary, optimal.
We prepare the restructuring plan—analysis of causes, proposed measures, implementation timeline.
We formulate arrangement proposals—translating strategy into language that will persuade creditors.
We file applications—with courts, with creditors, with authorities.
We conduct negotiations—with banks, suppliers, bondholders, employees.
We represent in proceedings—at every stage, from opening to execution of the arrangement.
We challenge decisions—when courts or creditors act improperly.
What We Do for Creditors
We monitor proceedings—so you know what is happening with your debtor.
We file claims—properly, timely, with appropriate documentation.
We contest the register—when your claim has been omitted or undervalued.
We participate in meetings—voting in accordance with your interest.
We sit on the creditors’ council—when the scale of your exposure warrants it.
We analyze arrangement proposals—is the arrangement better than the alternative?
We enforce performance—when the debtor fails to meet the terms.
Keynes on Changing One’s Mind
“When the facts change, I change my mind. What do you do, sir?”
Arrangement proposals are not carved in stone. Situations evolve. Creditors raise objections. New information emerges about asset values. The market environment shifts.
Sound restructuring strategy is adaptive. It responds to signals. It modifies proposals. It finds compromises that were invisible at the outset.
Stubbornness in restructuring is a cardinal sin. Flexibility is a virtue.
Timing
Seneca wrote that luck is the moment when preparation meets opportunity. In restructuring, luck is the moment when diagnosis meets still-sufficient resources.
Too early: there are no legal grounds to open proceedings; other, less invasive solutions exist.
Optimal: problems are visible, but the company still operates; there is something to save and something to pay for saving it.
Too late: assets have been scattered, key employees have departed, partners have withdrawn; only a shell remains.
Recognizing the right moment is a competence that knowledge of procedures cannot replace. Procedures will tell you how to conduct a restructuring. Experience will tell you whether it’s worth it.
In Closing: Heraclitus on Flow
“No man ever steps in the same river twice.”
The company that enters restructuring is not the same company that will emerge from it. The process changes everything: structure, relationships, sometimes identity itself.
This is not failure. This is flow. The only alternative to change is stagnation, and stagnation in a market economy means death.
Restructuring is a form of life—life that knows how to change in order to endure.
