Restructuring Modeling

This course is developed specifically for restructuring-focused investment bankers, consultants and distress debt investors. Using the high-profile Borders bankruptcy as the primary case study, trainees will learn the restructuring framework, followed by building a step-by-step three-statement bankruptcy model, including robust debt and creditor schedules, DIP / cash flow analysis and a recovery waterfall.

Provider: Wall Street Prep
Difficulty: Very difficult
Rating: 4

What You Will Learn

Working capital reclassifications, such as critical vendors/AP

DIP financing, borrowing base and availability calculations, adequate protection payments. Balance sheet roll-forward schedules that maintain a consistent link structure to the cash flow statement and increase transparency. Fees, rejection claims and CODI

Model recoveries at various operating scenarios. Construction of a recovery waterfall that can accommodate scenarios that deviate from the absolute priority rule. Using conditional formatting and Excel’s native date formulas to sensitize for different filing and emergence date scenarios. Avoiding circular references in the model while maintaining model integrity. Incorporating best practices for error-proofing, auditing, and model efficiency. Understanding how Fresh Start Accounting affects the model.

Couse structure

Bankruptcy/restructuring industry primer

  • Bankruptcy overview
  • Imputing asset values and measuring insolvency from market pricing of debt and equity
  • The importance and limitation of valuation methodologies like DCF and Comps in restructuring
  • Out of court restructuring process
  • In court restructuring process
  • Automatic Stay and Adequate Protection
  • Cash Collateral and DIP Financing
  • Restructuring Leases & Executory Contracts
  • Fraudulent Conveyance & Preference Actions
  • Plan of Reorg & Disclosure Statement and Cram Down Provisions
  • The Absolute Priority Rule

Case study modeling and valuation

  • Building a fully integrated three statement bankruptcy model
  • Master modeling mechanics that dynamically distinguish between prepetition, postpetition and post-emergence phases of a restructuring
  • Make restructuring specific working capital and operational adjustments to traditional modeling assumptions
  • Build a sophisticated multi tranche debt schedule, including the possibility of a DIP rollup
  • Deriving valuation ranges using multiples
  • Analyzing proposed plan distribution
  • Performing recovery sensitivity by investor class (“waterfall” analysis)

Additional recognition

This program is eligible for 35 PD credit hours as granted by CFA Institute.

Prerequisits

The course is self-paced and anyone is welcome to enroll. It does not assume a prior background in Restructuring Modeling. However, those who select this course should possess knowledge in:

  • Accounting: The program assumes a basic introductory knowledge of accounting (e.g. interaction of balance sheet, cash flow, and income statement). Students with no prior background in Accounting should take the Accounting Crash Course (included in this package).
  • Corporate Finance: Although general exposure to corporate finance is helpful, it is not required.
  • Excel: Basic introductory Excel knowledge is highly recommended. Students with limited or no experience using Excel should take the Excel Crash Course (included in this package