medium · Corporate Credit Analysis distressed
A distressed investor is identifying the 'fulcrum security' for NorthStar Dynamics. The firm has $200M in ABL debt, $400M in first-lien term loans, and $300M in senior unsecured notes.
If the analyst's revaluation of the business leads to an EV of $550M, what is the fate of the unsecured notes?
- They receive a 50% recovery as the fulcrum security
- They receive zero recovery from the waterfall
- They receive a 'gift' from the ABL lenders to ensure a consensual plan
- They convert to 100% of the post-reorg equity
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