Corporate reorganization is a process to improve a company’s capital efficiency with a goal of attempting to increase profits or return on investment. Whether due to a change in corporate ownership or structure, acquisition, merger, consolidation, buyout, transfer, recapitalization or change in identity, VRC can provide valuations to support all types of reorganizations.
For companies that are seeking to restructure their financial obligations, there are generally three alternatives available:
A restructuring of the liabilities and obligations of a debtor through negotiations directly with the debtor’s creditors outside of the bankruptcy courts. Oftentimes, a company needs a fairness opinion in workout situations to support new capital raises including affiliated transactions. Additionally, any new securities issued in connection with the workout will need to be valued.
A rehabilitation of a creditor under the Bankruptcy Code. Either the debtor-in-position (DIP) or trustee, a representative of the creditors, remains in control of the business and assets. We provide valuation services at various points during the reorganization process. Liquidation and going concern valuations are required under Section 1126 of the Bankruptcy Code. Any sold divisions or assets need to be valued. For fresh start accounting purposes, a valuation of underlying assets is necessary.
Using this alternative, the trustee collects all nonexempt property of the debtor, converts that property to cash and distributes the cash to creditors. Creditors look to the current liquidation value of assets to satisfy their claims. In conjunction with a Chapter 7 liquidation, we can provide a liquidation value of assets as well as an enterprise valuation.
Obtaining an objective valuation is a key component of the restructuring process. Our workout and bankruptcy engagements are free from conflicts of interest. Lenders, creditors, attorneys, courts and other third parties view our findings with confidence.
Most parties involved in a workout, bankruptcy or restructuring may benefit from VRC’s valuation and value-related services for the following:
- Asset-based financing, including debtor-in-possession financing
- Identification and valuation of significant intellectual properties
- Going concern valuations
- Equity valuations
- Solvency opinions
Members of our professional staff testify before bankruptcy courts and comparable tribunals regarding these and other value-related matters. In addition to financing-related services, we supply entities emerging from Chapter 11 with allocations of reorganization value for use in fresh start accounting.
We can also provide valuations in support of restructuring capital. When a company anticipates the distribution of an extraordinary dividend to shareholders, typically as a result of recapitalization, VRC can provide an opinion as to the solvency of the company as of the date after the dividend distribution, which also considers post-transaction financing.