Informally restructuring a balance sheet is not about a series of individual negotiations. The real work is to establish guiding principles and to convince creditors the process is being rationally and fairly handled. If successful, the proposal itself is just math.

A troubled company is a company on a path to financial crisis guided by a management team that fails to recognize it is on that path. Understanding when a business is in trouble matters because identifying the problem early provides more flexibility for a solution and lessens the risk of eroding shareholder value.

When a company is in trouble, management must side-step the external stresses and focus more on core profit generating activities.