Introducing the Corporate Restructuring Machine: An Open Platform Approach

The promise of Artificial Intelligence (AI) has become apparent. Yet how will AI affect corporate reorganizations? Based on previous work on the use of AI applications in negotiations, we argue that the potential of such applications to increase the efficiency of corporate workout negotiations is significant. To do so, we imagine the “Corporate Restructuring Machine” (CRM). This is a private, online platform armed with AI tools and services that are designed to support or even automate corporate workouts (out-of-court restructurings). Stakeholders, particularly creditors and shareholders, could join the platform and opt into AI applications at different times, for different services, and at different prices. These tools promise to allow parties to make better decisions in a much smoother process. We describe in detail the process of setting up and running the CRM, based on the current practice of corporate workouts. We demonstrate how old and new contractual solutions to financial distress could be effectively implemented with the CRM. This includes the “London Approach” and the INSOL Principles for corporate workouts, and various proposals for concluding “bankruptcy contracts” or choosing the applicable bankruptcy regime. The endpoint of the development could be a fully automated (AI-driven), comprehensive and private reorganization process/system.