Part IV of IV This article is the fourth (Read Part I, Part II, and Part III) and final part of a series related to the development of—and the reporting of—a bankruptcy-related appraisal of debtor company industrial or commercial property. This part considers (1) the valuation synthesis and conclusion process and (2) the reporting of the bankruptcy-related property appraisal. Introduction Property appraisal ...

Part II of IV This article is part two (read Part I here) of a four-part series related to the bankruptcy-related appraisal of industrial and commercial company real estate and real property, tangible personal property, and intangible personal property. Part one of the series considered all of the reasons why a valuation specialist in any appraisal discipline (herein called an “appraiser”) may be retained t ...

Part I of IV This is the first article of a four-part series. This initial article summarizes the generally accepted property appraisal approaches and methods that appraisers typically consider in a bankruptcy-related assignment. This discussion also describes the property appraisal synthesis and conclusion process. Due to the litigious nature of a bankruptcy proceeding, bankruptcy-related property appraisa ...

Put on the Gloves, Speak Bluntly, and Devise a Plan to Emerge from Chaos The author shares the trials and tribulations involving a troubled company that was on the verge of closing and managed to recover. In this engagement, he took the lead, coordinated and assigned roles within the company, negotiated with the IRS Revenue Officer, had difficult conversations with bank (a potential deal breaker), and was c ...

Expert Assignments and the Impact of COVID-19 COVID-19 has had a dramatic impact on the global economy. As the economic crisis deepened, the Wall Street Journal reported, “The nation’s bankruptcy industry is bracing for a wave of business collapses triggered by the coronavirus pandemic as its ranks have been thinned by a decade of economic growth.” Working on business bankruptcy assignments in 2020 will pre ...

Highlights of the New Bankruptcy Chapter: Chapter 5 Many small businesses could not afford the processes in place under Chapter 11. The SRBA, signed into law in August 2019, created Chapter 5 and was intended to provide a “fresh start” to small business owners. This article highlights some of the key issues under the new law. On August 23, 2019, a relatively small, 22-page bill known as the Small Business R ...

Procedures and Bankruptcy Code Changes for CPAs and Consultants A business or individual facing financial distress can utilize three types of federal bankruptcies to attempt to resolve their financial difficulties. This article provides an overview of the differences and when each would be used. Keep in mind that bankruptcy is a legal proceeding and must be handled by an attorney. However, business and fina ...

Case Study of a Real Estate Developer For most lost profits cases, the losses begin at the date of the harmful act and end when the injured party is returned to the position it would have had “but for” the alleged damaging act of the defendant. However, not every lost profit matter is a breach of contract where beginning and ending dates can be easily defined. Sometimes losses may not occur until a period i ...

Unsecured Creditors: Risk and Cramdown Rates (Part II of II) This is the second of a two-part article, read Part I here. In October 2017, the Second Circuit Court of Appeals handed down its decision on cramdown interest rates in the matter In re: MPM Silicones, LLC. This decision has already stirred a great deal of discussion regarding cramdown interest rates to be paid secured creditors in Chapter 11 bankr ...

Unsecured Creditors: Risk and Cramdown Rates (Part I of II) This is the first of a two-part article. In October 2017, the Second Circuit Court of Appeals handed down its decision on cramdown interest rates in the matter In re: MPM Silicones, LLC. This decision has already stirred a great deal of discussion regarding cramdown interest rates to be paid secured creditors in Chapter 11 bankruptcy matters. Numer ...

Once a petition for Chapter 11 is filed with the bankruptcy court, the company usually undertakes a strategic review of its operations, including opportunities to shed assets or even lines of businesses.  The Chapter 11 reorganization process concludes when the bankruptcy court confirms a reorganization plan which specifies a reorganization value and which reflects the agreed upon strategic direction and ca ...

For management teams working through a bankruptcy, there are a number of valuation-related considerations.  Samantha L. Albert, senior financial analyst with Mercer Capital, explains five key concepts for management teams and their advisors to be familiar with when embarking upon a Chapter 11 reorganization. To read the full article in Mercer Capital's Financial Reporting Blog, click: 5 Things to Know About ...

Understanding the Language of Chapter 11 Cramdown This article will examine terms of art used in a Chapter 11 cramdown. These terms go hand in hand during a contested or cramdown hearing. The court will work to assure that the bankruptcy definition of these terms is met before confirming a plan. Any expert expecting to testify at a cramdown hearing should have a working knowledge of their meaning. ...

Cram Down Interest Rates (Part I of II) In this two-part series the author provides an overview of the issues confronted by courts and financial experts involved in a commercial real estate (CRE) bankruptcy. In this first part, the author discusses how a financial expert may go about to determine the appropriate interest rate for the underlying claims and analyze the CRE market. In the second part of this s ...

Creating Value for Business Owners and Board Members In this article, Edward Mendlowitz, CPA, ABA, CFF. shares his views regarding the importance of having a business valued. He identifies 50 ways that a valuation professional can provide something far more valuable than a number. While the valuation profession is under pressure to reduce costs or prepare a report, the business owner is better served in the ...

Unique Situations from Common Assignments The assessment of interest rates and appraising the value of a business are assignments not limited to bankruptcy work alone. Most financial experts are familiar with the methods required to perform these tasks. Even in the application of these basic analyses, Chapter 11 bankruptcy may present unusual assignments. This article discusses two unique situations that ma ...

Part II: Nine Additional Reasons a Valuation Is Needed in Chapter 11 This second part of the article focuses on the remaining nine reasons a valuation of IP is necessary in a Chapter 11. ...

Part I: Three of the 12 Reasons a Valuation Is Needed in Chapter 7, 9, and 11 This two-part article summarizes the various types of intellectual property that valuation analysts (“analysts”) may encounter within a commercial bankruptcy controversy, lists the generally accepted intellectual property valuation approaches, and presents the reasons why analysts may be asked to value intellectual property within ...

The Myth of Efficient Market Cramdown Rate In December 2014, the American Bankruptcy Institute issued its Final Report and Recommendations of the Commission to Study the Reform of Chapter 11. The Commission was comprised of 22 professionals. The group included attorneys, academics, financial advisers, and a former bankruptcy judge. After over two years of work, the Commission made more than 200 recommendati ...

A Chapter 11 reorganization is a chaotic and challenging time for a distressed company says Samantha L. Albert, a senior financial analyst with Mercer Capital. There are many valuation-related considerations that management teams and financial advisers need to have knowledge of. This article discusses five key concepts to focus on when proceeding with a Chapter 11 reorganization. This article is republished ...