Restructuring Modeling

Restructuring Modeling

Designed for restructuring-focused investment bankers, consultants and distress debt investors. Trainees will learn the restructuring framework and build a three-statement bankruptcy model the way it's done on the job.

Course Objective

At completion, trainees will have developed a 3-statement bankruptcy model from scratch and performed valuation and recovery analyses.

Using the Borders bankruptcy as our primary case study, we begin with an overview of the restructuring and bankruptcy framework. Then we will learn to build an advanced bankruptcy model from scratch, incorporating bankruptcy specific elements like DIP financing, the creation of liabilities subject to compromise, working capital drivers, cancellation of debt income, and Fresh Start accounting. We conclude the course with valuation analysis and a recovery analysis, where we will layer various valuation scenarios onto the model to analyze possible recoveries to the various creditors.

What You Will Learn

Model some of the most challenging aspects of a bankruptcy, including:

  • 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
  • Working capital reclassifications, such as critical vendors/AP

Wall Street Prep’s Restructuring Modeling course is used at top financial institutions and business schools.

Course Samples

Inputting Historicals

Modeling the DIP Revolver

Bankruptcy Model Sample (No Formulas)

XLS

Course Highlights


  • Step-By-Step Modeling Instruction

    The Restructuring Modeling Course delivers step-by-step lessons through videos, readings, ready-to-use restructuring financial and valuation models and exercises using a real case study.


  • Support Center

    Upon enrollment, students gain 24 month free and unlimited access to Wall Street Prep’s Online Support Center, where they receive answers to questions, free downloads, and important updates from a support staff comprised entirely of experienced former investment bankers


  • Boost Add-In for Excel

    Free Access to Boost, an all-in-one suite of time-saving tools designed for people who build financial models in Excel. Key features include: Easily assign custom shortcuts to all of Boost’s features; Easily understand long formulas with the powerful ‘Precedents’ and ‘Dependents’ Tool; A fully functioning classic 2003 menu (in ’07 and ’10 Excel); And much more!

Prerequisites

This course does not assume a prior background in Restructuring Modeling. However, it assumes an introductory knowledge of accounting (e.g. interaction of balance sheet, cash flow, and income statement) and proficiency in Excel. Students with no prior background in Accounting should enroll in the Accounting Crash Course. Students with limited experience using Excel should enroll in the Excel Crash Course.

Course Agenda

    • 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
    • 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)
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