Restructuring & Bankruptcy Math: Recovery Waterfalls, Absolute Priority & Plan Value

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Estimate what a fictional retailer's assets would fetch in a liquidation, in a low and a high case, net of the costs of winding the business down.
• Total every claim against the estate, group the claims by class and build the cumulative claims stack in order of seniority.
• Pour a going-concern sale price down the claims stack class by class and see where the value runs out.
• Compute every class's distribution in one copy-down formula, turn it into recovery percentages and share the unsecured recovery pro rata among its claimants.
• Split the first-lien lenders' claims into a secured part (up to the collateral value) and an unsecured deficiency claim, then work out what the lenders recover in total.
• Value the reorganised business in three cases, compare it with the liquidation value and decide in which cases a reorganisation beats a liquidation.
• Value the new equity created by the plan, hand cash, new debt and equity to each class and work out the recovery each class is implied to receive.
• Find the class where value runs out, the fulcrum, swap its claims for the new equity and calculate who owns the reorganised company.