Leveraging AI to unlock value in restructuring and turnaround engagements

Challenges: What AI gets wrong, and what it gets right

Perhaps the most significant pressure practitioners face is clients who are already deploying AI in service of reducing professional fees. But there is a gap between what many users believe these tools can do and what they can actually deliver. Large language models (LLMs) enhance productivity and expand capacity, but they do not replace expertise. This distinction matters enormously in a practice area where a misread covenant, a missed cross-default trigger, or a misjudged regulatory exposure can have catastrophic consequences for the client. 

The obligation to verify all AI-generated work products is a core professional responsibility, making it crucial for firms to implement robust quality-control protocols.

Opportunities: Where AI creates real value

Notwithstanding these cautions, the productivity case for AI in restructuring work is substantial. 

1. Automating rote but high-stakes tasks

Contract review and due diligence represent the clearest immediate opportunity. In a typical leveraged-finance transaction or distressed acquisition, counsel may need to review hundreds of agreements or leases to identify change-of-control provisions, consent requirements, negative covenants, and acceleration triggers. AI-assisted review tools can dramatically compress this timeline. Similarly, in restructuring matters, AI tools can assist with claims reconciliation, a notoriously labour-intensive process in large chapter 11 cases. 

2. Digesting and aggregating large data sets

AI tools can monitor regulatory feeds, summarise new releases, flag relevant developments for specific client matters, and compare proposed rules against existing frameworks. In distressed situations, AI can also assist with financial analysis, like identifying patterns in a debtor’s historical financials, flagging anomalies that may signal fraudulent transfer exposure, or aggregating intercompany transaction data across complex corporate structures. 

3. Enhancing the client experience

Speed is itself a client service, and AI can meaningfully accelerate delivery timelines across the practice. First drafts of motions, credit agreements, intercreditor arrangements, and ancillary financing documents can be generated from well-designed templates, and then refined by experienced counsel. AI-assisted research (when properly verified) also allows lawyers to survey a broader body of case law and regulatory precedent and produce more comprehensive advice.

Human judgement remains irreplaceable

In restructuring work, sophisticated business and legal judgement play the most consequential role for clients. As trusted advisors, professionals can use AI tools to amplify their own expertise rather than replacing it.

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Jack O’Connor is a partner in Levenfeld Pearlstein’s Financial Services & Restructuring Group. His practice focuses on commercial restructuring, insolvency, bankruptcy, and debtor representations in and out of court. He also counsels commercial real estate clients in both healthy and distressed situations.