Valuation

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.

This panel will discuss the assessment of a subject company and its situation, the nature of the assets in the distressed situation (i.e., company-specific or endemic of the industry), and other considerations for valuing companies in distress.

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 assessed as an indication of value?

"You know the math, but do you know how to win the argument? This panel will address the nuances of supporting your numbers, preparing your rebuttal brief and cross-examination, and providing valuable testimony for your position. We will address the important points in cross-examining your opponent’s position, discuss some of the more interesting recent bankruptcy valuation decisions, and analyze what works and what doesn’t in supporting key assumptions in the valuation process. "

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.

The strategic use of Examiners in some of the largest and most complex Chapter 11 cases has become more frequent in recent years. This panel explores the use of an Examiner to investigate, analyze and value potential causes of action and other contentious issues in ResCap and other significant Chapter 11 cases.

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

From the outset of AMR's chapter 11 filing in November 2011, the Creditors' Committee focused on working closely and collaboratively with the Debtors to craft innovative solutions for the airlines' labor and pension issues and to systematically evaluate AMR's restructuring alternatives, identify a path for emergence that maximized the value of the airline, and craft a confirmable plan of reorganization that would command the strong support of general unsecured creditors and other economic stakeholders. The reorganization plan that was adopted relied on the consummation of a merger with US Airways, in order to combine American's and US Airways' complementary networks, increase convenience and efficiency and provide more options for customers, as well as facilitate AMR's transformation into a profitable and sustainable global airline. This roundtable of advisors will discuss how early labor and pension strategies led to the development of a standalone business plan which then could be compared to a potential merger inside chapter 11 – preserving the synergy values for chapter 11 stakeholders. The roundtable will also discuss the unique distribution mechanism that was adopted which avoided valuation disputes during the plan confirmation process in favor of a post-emergence "market test."

This panel will address the entitlement of a secured lender with a "blanket lien" on a company’s assets to share in the going concern or enterprise value of that company when it is liquidated in a § 363 sale or otherwise dealt with under a chapter 11 plan. The circumstances under which such sharing in “going concern” value has been permitted, the cases on both sides of the issue, and the policy arguments in favor of and against the secured lenders’ right to access such value to satisfy its secured claim will be explored.

This panel will present strategies and tips for presenting financial evidence in chapter 11 cases. Panelists will discuss the selection, roles and fee arrangements of financial advisors and experts, employment applications/standards under the Bankruptcy Code, disclosure, protecting privilege, opinion testimony, use of demonstrative evidence, witness preparation and more.