Analysing Bankruptcy Models in Corporate Restructuring: A Study of Financial Stability

Analysing Bankruptcy Models in Corporate Restructuring: A Study of Financial Stability

Sayan Rano1

1School of Business Management, NMIMS Indore

ABSTRACT
"Change is the law of life. And those who look only to the past or present are certain to miss the future." — John F. Kennedy. [1]

In the increasingly dynamic business world of today, driven by technological disruption, changing consumer behavior, and competitive forces, corporate restructuring has emerged as a key strategy for organizational revival and expansion (Porter, 1996). Market failures, operational inefficiencies, and increasing debt have been the time-tested drivers of firms toward financial distress or bankruptcy. As a response, mergers, acquisitions, and realignments of the enterprise structure exist as strategic mechanisms to reestablish competitiveness and financial vitality. This research analyzes five large corporate restructuring cases of 12 Indian companies from industries like IT, pharma, media, infrastructure, and energy. Analyzing the financial positions of acquirer and target companies before and after restructuring using four well-known bankruptcy forecasting models which are Altman Z-Score, Grover, Springate, and Zmijewski, the model-based analysis accounts for different levels of recovery, pointing to successful turnarounds as well as persistent financial weaknesses. The results highlight strategic planning and model-based evaluation's role in guaranteeing sustainable post- restructuring performances.

Key Words:  Corporate Restructuring, Bankruptcy, Altman Z-score, Zmijewski Model, Financial Distress, Competitive Advantage.