Bankruptcy & Restructuring Valuation Services

Under the United States Code (“U.S.C.”) Title 11, bankruptcy is a legal procedure for dealing with debt problems of an individual or business (the “debtor”). Bankruptcy is a legal declaration of the inability or impairment of an individual or company’s ability to meet and pay their liabilities. Knowing the bankruptcy value of the business and its assets is critical to the restructuring process. Most business bankruptcies are resolved through one of the following procedures.

Chapter 7 — Also known as “liquidation” bankruptcy, a Chapter 7 filing allows for an orderly, court-supervised procedure by which a trustee takes over the assets of the debtor in bankruptcy, liquidates the assets for cash, and makes distributions to creditors. The value under liquidation of the debtor’s assets is the principal concern under Chapter 7, although knowing the reorganization value is crucial to determining whether a Chapter 11 proceeding is feasible.

Chapter 11 — Also known as “reorganization” bankruptcy, a Chapter 11 filing allows for a business, which desires to continue operations, to do so while concurrently repaying creditors through a court-approved plan of reorganization. While costly and time-consuming, Chapter 11 filings allow for insolvent companies to survive. The debtor typically must demonstrate (through the proper bankruptcy valuations and appraisals) that the reorganized value of the business is much greater than the liquidation value of the business, such that creditors will support the reorganization plan.

Out-of-Court Restructuring — This option is less expensive than a Chapter filing and provides the debtor with more flexibility. The debtor can maintain more control over its business and avoid damaging the intangible value (going concern value) of the operations. In a typical out-of-court restructuring, an informal creditors’ committee is formed to negotiate with the debtor, who must disclose financial and other information to the committee to facilitate a settlement.

Bankruptcy Valuations

In any bankruptcy or restructuring proceeding, expert asset appraisal services and business valuations are crucial to maintaining the confidence of the creditors’ committee or trustee. Appraisal Economics staff are experts in valuing tangible assets and intangible assets. Whether filing under Chapter 7 to liquidate assets, or under Chapter 11 in efforts to reorganize, Appraisal Economics has the personnel, expertise, and resources required to provide the kind of bankruptcy appraisals and valuations that can withstand scrutiny.

Whether you are a trustee, part of a creditor committee, or head of a distressed company, our experienced and skilled staff can provide a range of supportable conclusions of value, such as:

  • Orderly liquidation value
  • Forced liquidation value
  • Going concern value
  • Reorganization value

We provide these values (before, during, and after bankruptcy filing) for the business as a whole and for:

  • Tangible assets, such as machinery, equipment, land, buildings, improvements, etc.
  • Intangible assets, such as trade names, patents, designs, etc.

Whether the issue is secured or unsecured creditor collateral, adequate protection, solvency, fraudulent conveyance, fresh start accounting, or related tax issues, our expert bankruptcy valuations and bankruptcy appraisals can help facilitate the reorganization or restructuring process. Contact us today to learn more about bankruptcy and restructuring valuations.