The valuation of the underlying business will literally serve as the roadmap for the entire bankruptcy proceeding leading to a successful reorganization. Generally, the valuation is performed on an invested capital basis, i.e. without the debt which probably created the problem in the first place. The valuation will be used by the parties in interest to determine - based on their respective creditor ranking - who is entitled to what in a reorganization. Often the valuation is performed by using some form of discounted cash flow analysis, assuming credible projections are available.

Other services a business appraiser can perform in a chapter 11 filing include: (a) reviewing management's projections for reasonableness, (b) valuing the various classes of collateral, (c) test the going-concern versus liquidation presumptions of the parties, (d) identify spinoff opportunities, (e) prepare fraudulent conveyance analyses, (f) express solvency/insolvency opinions or (g) express a fairness opinion about the price/value of assets purchased by third parties in a break-up transaction.

The principal of JLP&Co.LLC has considerable experience of corporate insolvency matters in and out of the bankruptcy process. Call or e-mail for details!

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