Debt Restructuring of distressed companies that remain going concerns presents unique valuation challenges.

Traditional methods such as standard DCF (Discounted Cash Flow) analysis must be adapted to account for extreme uncertainty, potential restructuring and the risk of business failure interrupting future cash flows. Therefore, both academic research and industry practice increasingly support scenario-based analysis and careful risk adjustment when valuing these companies.

This paper explains how IT systems and agentic AI can support DCF analysis under two different information scenarios. The first assumes full information with forward-looking business plans. The second focuses on limited information based on historical data.

Furthermore, we examine how to determine a company’s debt capacity using Key Performance Indicators (KPIs). We also present an algorithm for structuring a refinancing plan that maximises debt recovery while ensuring the business can continue servicing future debt obligations.

Finally, the paper takes a cross-sector perspective with a particular focus on European markets. It demonstrates how agentic AI can support every stage of the debt restructuring process, from valuation to refinancing strategy.

Read the full article here: AI driven debt restructuring