Financial Restructuring

This course provides an intensive overview of financial restructuring transactions and processes from the perspective of distressed firms and their key stakeholders. It is intended for those who plan careers in general management, private equity, credit and special situations investing, banking, turnaround management, or financial advisory services. The course examines how companies may use in-court or out-of-court tools and processes to renegotiate their key contracts with creditors and other stakeholders when they encounter challenging business situations. Students will explore the financial, strategic, and legal implications of workouts, bankruptcies, asset/363 sales, and exchange offers, as applied in the context of financially distressed companies. Topics include valuation, absolute priority, creditor committees, intercreditor conflicts, debtor-in-possession (DIP) financings, ¿blocking¿ strategies, avoidance powers, contingent claims, tax considerations, international insolvency, and distressed investment strategy. In exploring these topics, the course focuses on the key legal and contractual rights that creditors and other counterparties possess, and how they may use these rights to optimize their negotiated outcomes in a restructuring. Students will gain the tools to identify distress before it occurs, analyze distressed companies, and design restructuring plans which create enterprise value while navigating various considerations. They will also gain an understand of how to structure financial obligations upon origination in a way to lower the probability of financial distress. Finally, the course will examine the purpose of bankruptcy design and future policy implications. The course is lecture-focused in the beginning, but will become more interactive and case-focused later in the course as students acquire the skills they need to tackle key issues. Grading will be based upon class participation (50%), and a paper due at the end of the quarter (50%). For the paper, each student will select a distressed company currently in the market and design a restructuring plan for it.