13 questions reported in Centerbridge interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
Questions
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Hard
Model builds
Built in the spreadsheet grid
Structuring for downside, collateral, priming risk and recovery. 7 questions
A foundational distressed-investing concept used in recovery and control discussions.
What is the fulcrum security in a restructuring, and why do distressed investors care about it?
The core quantitative exercise in distressed credit.
A company has $400m first lien, $250m second lien and $300m unsecured notes. Normalised EBITDA is $120m and comparable businesses trade at 5.5x. Calculate recoveries and identify the fulcrum security.
A senior distressed-credit case that combines recovery analysis, process strategy and ownership underwriting.
You own $120m of first-lien debt and the company is being sold in bankruptcy. Explain a credit bid and how you would decide whether to use one.
Special situations and distressed funds compete to provide it.
Why is debtor-in-possession financing attractive to a lender, and why would an existing creditor provide it even at a loss-making rate?
The defining development in leveraged credit over the last decade.
Explain the main liability management exercises. How does a lender end up worse off despite holding senior secured debt?
Special situations interviews test structuring creativity against downside protection.
A company needs $150m urgently and cannot access conventional markets. How would you structure the financing, and how do you get comfortable?
A senior special-situations case on valuing a legacy first-lien position after a non-pro-rata transaction has created a new superpriority tranche.
A company has $400m of legacy first-lien debt. A majority group exchanges into $100m of new superpriority debt and provides $25m of cash, leaving non-participating legacy lenders structurally behind…
Recovery analysis, capital structure relative value and covenant leakage. 2 questions
Credit hedge fund interviews test whether you can think across the whole structure.
A company's bonds trade at 70 cents while the equity still has a $2bn market cap. Is there a trade? Walk me through the analysis.
Credit funds test whether you can compare instruments rather than just analyse a company.
A company's secured bonds yield 8% and its unsecured bonds yield 14%. Is the unsecured cheap? Walk me through the analysis.
Liquidity runway, fulcrum security, Chapter 11 mechanics and recoveries. 2 questions
Material in restructuring and in acquisitions of loss-making companies.
A target has $500m of NOL carryforwards. How much is that worth to an acquirer, and where does it go in the valuation?
Core technical for restructuring groups and distressed funds.
Walk me through a Chapter 11 process, and explain what a debtor actually gains by filing.
LBO modelling, leverage capacity, value creation plans and exit paths. 1 question
Core to restructuring, special situations and distressed credit interviews.
What is the fulcrum security? Walk me through how you'd identify it, and explain the loan-to-own strategy.
Deal break risk, spread maths, regulatory timelines and downside to unaffected. 1 question
A classic structural inefficiency that event-driven funds return to repeatedly.
A company emerges from Chapter 11 and its new equity begins trading. Why is this often mispriced, and what do you analyse?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Company tags reflect where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with Centerbridge.