Valuation

Using a case study approach, this panel will examine the restructuring alternatives of a typical mid-cap company, with mock negotiations between and among a distressed company, its senior secured bank lenders, its mezzanine lenders and the equity. The presentation will focus on valuation, along with the benefits and burdens of (1) bankruptcy, (2) exercising the rights and remedies of a secure lender, (3) a consensual out-of-court restructuring and (4) the techniques and strategies for each constituency to achieve its goals.

Distressed companies usually show declining financial performance prior to failure. This session will focus on key financial ratios such as liquidity, leverage and coverage, as well as a firm’s sources and uses of funds, cash-conversion cycle and free cash flow, both before and after restructuring.

What is the difference between “market value” and “intrinsic value”?; what is market value, and how is it discerned?; how reliable are various indicia or tests of market value, including: (1) public (or private) bankruptcy trading prices of the debt or equity securities of a debtor, (2) outcome of the bankruptcy sale process and (3) credit-bidding, and when can “market tests” be wrong?; have bankruptcy courts allowed lay perceptions of discernible market value to replace expert testimony and other proofs relevant to § 506 determinations or cramdowns?; how can rights offerings be used and asses

After you have found your valuation expert, how do you know that the expert’s report is accurate? This panel will discuss some of the red flags that should cause you to raise some questions with your own expert (or consider asking the other side’s expert in cross-examination), and will discuss how organization might make it easier or harder to catch red flags.

This panel will consider current issues of interest to judges and insolvency professionals.