medium · Private Credit & Debt portfolio-management-monitoring-workouts
In a distressed restructuring, the 'Fulcrum Security' is identified as the Senior Unsecured Notes.
If the total Enterprise Value is $300M, the Senior Secured Debt is $250M, and the Senior Unsecured Notes total $100M, what does this mean for the outcome of the reorganisation plan?
- The unsecured noteholders will likely end up as the new controlling equity owners of the company
- The senior secured lenders will be forced to take a $50M write-down to their principal
- The existing equity holders will retain a 10% 'tip' because the company is still a going concern
- The unsecured notes are 'out of the money' and will receive zero recovery
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