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Establishing a market-based cramdown rate in a Chapter 11 matter is a more complex undertaking than simply applying somewhat qualitative adjustments to the prime rate as suggested by the Till Method. This article explains that while the Till Method may be a useful framework to consider, especially in the absence of market-based empirical data, the inherent characteristics of the method may make its application in a Chapter 11 matter problematic.
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The current environment remains highly favorable for companies wishing to pursue capital markets activities, regardless of type or purpose. Whether refinance, growth capital, partial liquidity, or full liquidity, such transactions are both possible and in many cases ideal in today’s market.
The Mirant Chapter 11 case helps to shed light on some key valuation issues and how they have been handled in the context of bankruptcy proceedings. While every case has specific facts that can affect the outcome and the judge’s views, this article discusses how it is important to understand some of the valuation nuances that exist in a bankruptcy context.
The analysis of industry ordinary course in bankruptcy preference matters can be significantly improved with information that can be gathered through discovery from both the debtor and creditor on their actual payment practices during the preference period.
