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Investing in Distressed Businesses

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Investing in Bankruptcy Claims as a Cash Investment

Investing in bankruptcy claims can be very profitable or can result in a significant, or even total, loss. Bankruptcy claims are a creditor’s right to payment from a debtor. A bankruptcy claim can be secured by the debtor’s property or can be unsecured. Claims are classified in chapter 11 plans of reorganization according to their […]


90 Second Lesson: How to assess whether a distressed business can be turned around?

QUESTION: Bill H., a business consultant in NYC, asks, how do I determine if a distressed business I am being asked to help is just too far gone to save? ANSWER: Bill, if you have to ask this question, you might be doing your client a service by finding someone else who knows about the […]


Cash is King – The Importance of Liquidity in a Distressed Company’s Capital Structure

A company’s “capital structure” is the array of its liabilities and equity. Capital structure commonly consists of three main components: working capital (or operating debt), financing debt, and equity.


Third-Party Litigation Funding and Issues It Creates In Bankruptcy Cases – This Ain’t Your Father’s Contingency Fee Arrangement!

Third party litigation funding (“TPLF”) is, beyond a doubt, here to stay. In bankruptcy cases, TPLF arises in a number of contexts. First is the TPLF as a pre-petition secured or unsecured creditor—i.e. the TPLF source funded litigation and thereby acquired property rights in litigation proceeds or perhaps otherwise as a result. Second, in a […]


90 Second Lesson: First Step When Purchasing a Distressed Business

Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to [email protected] and we will try to answer it. QUESTION: What is the first integral decision a potential purchaser of a distressed business must make? ANSWER: Assuming that the seller has not already […]


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