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RESEARCH PRODUCT

Criteria for Selecting Restructuring Strategies for Distressed or Declining Enterprises

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This paper seeks to determine the criteria for choosing restructuring strategies for declining or distressed enterprises. First, the paper differentiates between different stages of decline and different levels of distress, of which bankruptcy is an application. Second, it reviews the different forms of restructuring appearing in the academic literature. Third, it formalizes a descriptive model of determining restructuring applicable to distressed and declining enterprises. Specifically, the selection of a restructuring strategy is influenced not only be general restructuring criteria (firm-specific factors, the environment and characteristics of different restructuring) but also by the decline or distress (the fact of decline, the level of distress, the causes of distress). Finally, it presents the findings of other researchers and indicates where it would fit in this model. Recent well-reported cases of enterprises facing decline and distress have been reviewed to apply the model. Future directions for research are indicated.