Case Study
The Restructuring of The Loewen Group

Prof. Ian Giddy, New York University

The Loewen Group (HBS Case 9-201-062)

In early 1999 the Loewen Group, the second largest funeral company in North America, faced a financial crisis. Not only had the company's stock price plunged, but more urgently the company had $42 million of debt payments coming due in April. It seemed unlikely that the company would be able to meet these obligations. Facing possible bankruptcy, the company had to work out how to possibly restructure its debt.


  • What was the source of Loewen's problems? Were they financial or operational?
  • What kind of financial restructuring would you propose to the company's banks?
  • Will this offer a solution? What else might be necessary? What other restructuring can you suggest?
  • Group 1: Loewen management. You are about to meet with the Creditors Group. Please propose a debt restructuring that will be satisfactory to the creditors while at the same time giving shareholders the best possible deal they could reasonably expect. The proposal should offer banks and bondholders a new deal that could include deferred repayment of principal, deferred interest, equity participation, or other combinations that are better than what the creditors hold now. It should also give the lenders an incentive to avoid bankruptcy.
  • Group 2: Creditors Group. You are a committee representing the secured creditors. Please propose a restructuring that improves your position while averting a Chapter 11 bankruptcy. In doing so, estimate the value of the business and of the company's debt.
  • Group 3: SCI. Now is your chance to buy Loewen. What's it worth to you? Should you approach the new CEO, John Lacey? Or what deal could you offer to the banks, assuming they are in the driver's seat at this point?

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