Valuation is critical in a restructuring. Where the 'value breaks' in the capital structure is one of the first questions to ask & will determine who has an economic interest in the company & how the restructuring process is managed & negotiated.
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Absolutely, you are spot on. It also gets hard as valuation can change as underlying business conditions change & everyone hires their own experts to try to influence the process / valuation. You also get the same creditors in both in the money & out of the money classes of claim
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So many different incentives at play... eg mgmt might want a low valuation so any equity in the incentive plan is worth more post-restructuring
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