A Fitch Ratings analysis of corporate bankruptcies released yesterday found that fundamental estimates of reorganization enterprise value or negotiated settlement values used in bankruptcy reorganization plans are critical to the success of an issuer's reorganization process, Reuters reported yesterday. On average, the 75 defaulted issuers in Fitch's sample eliminated 68 percent of pre-petition debt through their bankruptcy processes, with debt reduction in 73 of 75 cases. Fifteen companies emerged with no debt outstanding due to being completely liquidated or emerging as going concerns with no debt. Relative position in the capital structure was also a key determinant of recovery. First-lien creditors fared much better than junior creditors in terms of ultimate recoveries: 54 percent of the 99 secured claims (all priorities) received plan distributions that resulted in recoveries of at least 91 percent of the claim amounts. Creditor recoveries on unsecured debt were more widely distributed: 43 percent of the 71 unsecured issues received distributions of 10 percent or less of their claim amount and 16 percent recovered at least 91 percent. Read more: http://www.reuters.com/article/2013/02/14/idUSWNB0035C20130214
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