Page 9 - Bankruptcy and Reorganization Services

Avoidance or Recovery Actions ....................................................................................................................... 24

Assessing Solvency, Capital Adequacy, Ability to Pay Debts as They Mature, and Reasonably Equivalent
Value ............................................................................................................................................................. 24

Plan of Reorganization ...................................................................................................................................... 25

Assessing Debtor’s Reorganization Value .................................................................................................... 25

Assessing a Market Rate of Interest .............................................................................................................. 26

Fresh-Start Reporting .................................................................................................................................... 26

Best Interests Test ......................................................................................................................................... 26

Section 363 Sale ................................................................................................................................................ 26

Chapter 7 — The Levels of Value Framework, Premiums, and Discounts................................................... 28

Levels of Value Framework .............................................................................................................................. 28

Exhibit 1 ........................................................................................................................................................ 29

Prerogatives of Control ..................................................................................................................................... 30

Degree of Control ............................................................................................................................................. 30

Control Value .................................................................................................................................................... 32

Noncontrolling Value........................................................................................................................................ 33

Exhibit 2 ........................................................................................................................................................ 33

Discounts for Lack of Marketability ................................................................................................................. 33

Chapter 8 — Financial Tools and Techniques ................................................................................................. 35

Ratio and Benchmark Analysis ......................................................................................................................... 35

Bankruptcy Risk Models................................................................................................................................... 35

Statements of Cash Flows ................................................................................................................................. 36

Understanding the Debtor and Its Environment ............................................................................................... 36

Chapter 9 — Valuation Approaches and Methods .......................................................................................... 38

Market Approach .............................................................................................................................................. 38

Guideline Public Company Method.............................................................................................................. 39

Guideline M&A Transaction Method ............................................................................................................... 45

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