Selection Process for Restructuring Strategies for Sick Companies

A. Ashta (France), F. Diaz (Spain), and L. Tolle (France)

Keywords

Bankruptcy, decisionmaking, distress, psychological factors

Abstract

The restructuring of sick companies should be based on rational objective criteria. However, decision-makers are influenced by psychological factors based on their unique personal experience and environment. In this paper, we describe the objective factors and incorporate the decision making model enriching the classical rational model by mixing social psychology with the objective economic based approach. The model essentially develops the idea that the interaction of enterprises and environment may create decline or distress. To recover, enterprises need to restructure. The decision-making will depend on the distressed enterprise, the environment, the restructuring techniques as well as the psychology of the decision-maker which is influenced by all the above. It is this decision-making that finally determines the restructuring selected.

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