Financial strategies for distressed companies. A critical analysis and operational tools

Distress management is an important challenge for firms operating in an increasingly complex and networked environment where it is impossible to precisely predict how to make the firm achieve the lost economic and financial balance. This situation has become tragically evident with the recent spread of COVID-19 whose economic crisis have drawn attention from policymakers, companies, and investors. The global environment, indeed, have improved economic potential, but also introduced new, and unpredictable, vulnerabilities: in modern global economic system, the processes are often spread across firms operating in multiple countries. To overcome these issues, according to a strategic viewpoint, managers should perceive the crisis of the firm as an opportunity rather than as a threat. In doing so, they adopt a strategic approach characterized by a new attitude aimed at competition and discontinuity over time. The distress of the firm can evolve into the cessation of the business activity or, by way of a plan, to recovery. The management should promptly identify the alerts that occur but often the causes of the crisis remain hidden even for long periods of time, manifesting suddenly and unexpectedly. In this situation, a well-planned financial strategy plays a fundamental role. The aim of this book is to provide a comprehensive framework of distressed firms, with particular focus on the recovery plan and the financial strategy to adopt. This framework highlights the main dimensions of the distressed firm management by means of a structured recovery plan that detail the financial strategy for the investment decisions among uncertainty and risk. Therefore, the book enriches firm distress literature and suggest insights for scholars and provides guidelines for practitioners.