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The Value Distribution Waterfall: Flows and Diversions
This session will examine the legal issues that impact the flow and diversion of the value distribution waterfall, including identifying gaps between the scope of, and the methodology for determining, enterprise value and collateral value; the impact of §§ 502, 506(a), 506(c) and 552 on the allowed amount of secured and unsecured claims; and contractual and non-contractual adjustments to legal priorities (including intercreditor lien agreements, intercreditor claim-subordination agreements, participation agreements and collective action, equitable subordination, intercompany claims and substantive consolidation). Using a hypothetical case, the panel will illustrate these issues and the uncertain and complex valuation, allocation and intercreditor issues that can arise in a multi-tranched, multi-debtor restructuring case
Bankruptcy: When Is It the Answer? Maximizing the Value of Distressed Debt
In today’s environment, several options exist for effectuating a restructuring of a company in distress. When is a chapter 11 filing the best option given the costs, risks and potential for reputational damage, and when is it not? This panel will discuss the fundamental questions to be asked when considering the alternatives to bankruptcy and, more specifically, when bankruptcy preserves or creates value.
Track B: Markets vs. Models
This panel will consider the robustness of financial models and valuation techniques in assessing the value of financially distressed businesses vis-à-vis the market for debt and equity securities of such businesses. Market efficiency/accuracy will also be considered, as well as the circumstances that might warrant abandoning the values determined by the market in favor of a model-driven value estimate.
Track B: Revenue and Cash Flow Forecasting
This session will outline methods of developing meaningful and timely revenue and cash flow forecasts for financially distressed businesses, including considerations that management takes into account in developing its forecast, commentary on relevant case law concerning such matters, and factors that could be considered by interested third parties and practitioners regarding the reasonableness of such projections, such as modeling techniques.
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