Most restructuring engagements begin with a reality that appears contradictory to people encountering financial distress for the first time. The underlying operating business may continue generating meaningful EBITDA while the existing legal entity becomes financially unsustainable. Customers continue buying. Employees continue working. Revenue continues flowing through the organization. Yet the obligations attached to the entity may have reached a point where the capital structure can no longer support the operation creating that value.
Experienced restructuring professionals seldom need to ask whether value exists in those situations. The operating results often answer that question quickly. The more important question is whether that value can still be realized.
A distressed borrower may possess a valuable operating business and still be headed toward liquidation. The existence of value does not guarantee that value can be preserved. Liquidity shortages, creditor actions, covenant defaults, maturity issues, litigation, competing claims, vendor concerns and management distraction can all interfere with the ability to convert a functioning operating business into recoverable stakeholder value.
That problem sits at the center of restructuring practice. A senior lender evaluating remedies is not simply deciding whether collateral has value. The lender is often evaluating whether the value created by the operating business can be captured before continued distress destroys it. A prospective buyer and a restructuring professional may reach the same conclusion. The analysis frequently begins from different perspectives but arrives at the same economic question: Can the value created by the operating business be preserved, transferred or realized before the deterioration of the existing entity destroys it?
That inquiry leads directly to the concept of going-concern value—the economic value created by assets operating together within a functioning business. The equipment, inventory, receivables and facilities all matter, but a functioning operating business frequently produces value beyond what those assets would generate if separated and sold individually. Customers buy from operating businesses. Employees work for operating businesses. Suppliers support operating businesses. Operating businesses generate cash flow. The value stakeholders seek to recover is often tied to the continued existence of that operation rather than the resale value of the underlying assets.
This is why a profitable acquisition is often evaluated very differently from a liquidation. A buyer pursuing a going-concern transaction is frequently purchasing earnings capacity, customer relationships, workforce continuity, operational infrastructure, market position and the ability to continue generating future cash flow. A liquidation buyer is generally purchasing assets.
The difference is not subtle.
A business generating several million dollars of EBITDA may own equipment worth only a fraction of the value supported by its operating performance. The equipment helps create the earnings. The earnings create the value. Once the operation ceases functioning, the economic relationship that produced that value may disappear.
For restructuring professionals, this reality changes the way distress is evaluated. Financial distress does not automatically answer whether meaningful value remains. A company may be insolvent, in default, or facing aggressive creditor action, but none of those conditions necessarily determine whether the underlying operating business continues creating value worth preserving.
Many distressed situations are better understood as a separation problem. The underlying operating business continues producing value, but the existing legal entity can no longer support the obligations attached to it. The challenge becomes finding a mechanism capable of separating the value-producing operation from the financial conditions preventing that value from being realized. That challenge is where restructuring begins.
The distinction between going-concern value and asset value becomes particularly important when evaluating why sophisticated stakeholders frequently pursue restructuring even when liquidation remains available. Assets almost always possess value. The question is whether greater value can be realized through preserving the operating business than through liquidating the assets supporting it.
A senior lender confronting a distressed borrower often faces precisely that decision. The lender generally possesses remedies. Collateral can be liquidated. Collection efforts can proceed. Enforcement rights can be exercised. Yet lenders regularly devote substantial time, expense and professional resources toward restructuring efforts because liquidation may represent the lowest-value outcome available, even when it remains the most immediately available remedy.
The problem often isn’t the operating business—it’s that the existing entity can no longer support the obligations accumulated around it. Under those circumstances, a liquidation may recover the value of equipment, inventory, receivables, vehicles and other assets. Yet the value created by the continuing operation may never be fully realized.
This helps explain why so much of restructuring practice focuses on stabilization. Liquidity preservation, creditor coordination, operational continuity, workforce retention, customer confidence and vendor support are not pursued merely to keep a troubled company alive. They are pursued because going-concern value can deteriorate rapidly once an operating business begins losing the conditions necessary to continue operating.
The process is often self-reinforcing. Key employees depart because uncertainty increases. Customers become concerned about continuity. Vendors tighten terms. Management shifts attention from operations to crisis management. Cash flow deteriorates. The operating platform that produces value begins to weaken. By the time a liquidation occurs, stakeholders may be recovering against a business that no longer resembles the enterprise that existed only months earlier.
Many restructuring professionals have encountered situations in which the underlying operating business possessed substantial value when distress first emerged but very little value remained by the time remedies were finally exercised. The assets were still there. The operation that gave those assets their greatest economic utility was not.
This is one reason delay can become so destructive. Financial distress frequently begins as a balance-sheet or capital-structure problem. Left unresolved, it often evolves into an operational problem. Once operations begin deteriorating, the going-concern value stakeholders were trying to preserve may start to disappear long before the assets are sold.
Chapter 11, Article 9 restructuring, consensual workouts, recapitalizations, going-concern sales and numerous other restructuring mechanisms emerge from the same commercial reality. Each seeks, in its own way, to create a path through which the value of a functioning operating business can be preserved, transferred or realized before continued deterioration destroys it.
The objective is not simply to reduce debt. It is not merely to delay creditors. It is not to avoid liquidation at all costs. The objective is to determine whether the underlying operating business has sufficient going-concern value to justify preservation and, if so, whether a restructuring mechanism exists to separate that value from the conditions preventing its realization.
The restructuring profession often describes this value as the value of assets “in use” rather than in liquidation. The phrase appears in different contexts and disciplines, but the underlying idea remains remarkably consistent. Assets functioning together inside a revenue-producing operation frequently create more value than those same assets sold individually after the operation has ceased to exist.
Consider a manufacturing line. The machinery, inventory and real estate all possess value, yet the greatest value may reside in the fact that those assets are currently producing products, serving customers, generating revenue and creating earnings. Once the operation stops, stakeholders may still recover asset value. The value attributable to the continuing operation may no longer be available.
This is why experienced restructuring professionals often become skeptical whenever a distressed situation is described solely through the lens of debt balances or creditor pressure. Debt, default or insolvency do not determine whether going-concern value exists.
The relevant inquiry is usually much narrower. Does the underlying operating business continue creating economic value? If the answer is no, the analysis often becomes relatively straightforward. An operating business that cannot generate positive economic value may possess assets worth selling, intellectual property worth monetizing, receivables worth collecting or real estate worth disposing of. Stakeholders may still achieve meaningful recoveries. Yet the economic rationale for preserving the operation itself becomes increasingly difficult to justify.
Many distressed businesses, however, present the opposite situation. The underlying operating business continues producing meaningful value. Customers remain, revenue is substantial, EBITDA stays positive. Demand for the company’s products or services remains intact. The value-producing operation continues functioning. The existing entity simply cannot support its obligations.
This is the scenario restructuring exists to address.The central challenge is not determining whether value exists—that is often visible to every stakeholder involved—but whether it can be realized before financial distress destroys it.
That shared stake is what keeps parties who disagree on almost everything else at the same table. Senior lenders, restructuring professionals, buyers, investors, management teams and unsecured creditors generally agree that liquidation would recover far less than preservation. What they disagree on is execution:
How can the value be preserved?
Who should control it?
How should it be transferred?
Which stakeholders should benefit from it?
Can sufficient time be created to realize it?
Can the liabilities burdening the existing entity be addressed without destroying the operation creating the value?
Those questions occupy much of the restructuring profession because they are the questions that determine recoveries.
Going-concern value, therefore, is not merely a valuation concept. It is the economic premise underlying the restructuring process itself. Without value worth preserving beyond liquidation proceeds, there is little reason to pursue a restructuring. The analysis shifts toward orderly disposition and recovery. When substantial going-concern value remains, the conversation changes. Attention turns toward identifying the restructuring mechanism most capable of preserving, transferring or realizing that value before it disappears.
That is why restructuring professionals begin with the operating business before they begin with the debt. The debt explains the distress. The operating business determines whether there is value worth saving.
Author Bio
Robert DiNozzi is Chief Growth Officer and Partner at Second Wind Consultants, a nationally recognized business renewal and restructuring firm specializing in Article 9 restructuring, financeability restoration, and non-judicial solutions for distressed companies. He also helps oversee Rise Alliance, Second Wind’s Credit Rehabilitation Restructuring division, focused on helping businesses stabilize cash flow, rebuild collateral support and regain access to conventional financing.
DiNozzi is the recipient of the 2026 ABF Journal Legends & Leaders Innovator Award and was recognized by Los Angeles Times Studios as a Banking & Finance Visionary for advancing market-based restructuring frameworks that preserve operating businesses, align stakeholder interests, and create more efficient paths through distress under existing commercial law. He serves on the Global Board of Trustees of the Turnaround Management Association (TMA) and is a frequent contributor to ABF Journal, ABL Advisor and the Journal of Corporate Renewal.
