Business Valuation Services

Expert Witnesses

Valuations for Bankruptcy and Reorganization

Valuations are often required in connection with bankruptcy and reorganization proceedings. The following are examples of some of the circumstances in which they are needed.

• A valuation of collateral securing a claim may be needed to determine the adequate protection of the security interest of a secured creditor.
  
  
• A transfer by a debtor may be avoided as a fraudulent transfer if the assets are transferred for less than their reasonably equivalent value. A valuation analysis of the property transferred and the property received in the transfer, and of the solvency of the debtor and the adequacy of its capital, is often required as part of a fraudulent transfer analysis and determination.
  
  
• A valuation of a debtor corporation may be required to demonstrate the feasibility of a proposed plan of reorganization. This might include a consideration of the soundness of the proposed capital structure of the debtor corporation and the reasonableness of the projected cash flow.
  
  
• If the debtor-in-possession (or bankruptcy trustee) is planning a sale or merger of the debtor corporation, a business valuation may be needed to insure that the transaction takes place at a price that is fair to the bankruptcy estate.
  
  
• If existing shareholders will retain an equity interest in a reorganized debtor corporation, it may be necessary to perform a valuation to determine that they have contributed new value in an amount sufficient to justify a new value exception to the absolute priority rule.

Hempstead & Co. has considerable experience in performing valuations in the area of bankruptcy and reorganization, and we stand ready to share the benefits of our experience with you.