Liability management exercises (LMEs) have become a central feature of the restructuring landscape, offering companies flexible, out-of-court solutions to address balance-sheet stress. Yet as these transactions grow more sophisticated, they increasingly raise a fundamental question: Who determines enterprise value when the deal happens outside chapter 11? Without a court-supervised valuation process, value is shaped through negotiation leverage, capital structure design, cooperation agreements, and financial engineering tools such as uptiers, dropdowns and priming transactions. These techniques can optimize outcomes for participating creditors and companies, but they can also spark valuation disputes, litigation risk and longer-term stakeholder friction. This panel examines how valuation is constructed in out-of-court LMEs, and will provide a framework for evaluating whether an LME enhances enterprise value or merely redistributes it.
Learning Objectives:
- Attendees will analyze how enterprise value is determined in liability management exercises conducted outside of Chapter 11, including the role of negotiation dynamics and capital structure design.
- Attendees will evaluate the impact of common LME techniques—such as uptiers, dropdowns, and priming transactions—on creditor recoveries and overall enterprise value.
- Attendees will assess the legal and practical risks associated with out-of-court valuation, including potential disputes, litigation exposure, and intercreditor conflicts