Bankruptcy
The difference between Chapter 11 and Chapter 7...
What is: Chapter 11 is a reorganization, whereas Chapter 7 is a liquidation.
The difference between equity and debt investing?
What is: equity upside and downside are unlimited; debt can only receive par, with coupons and structural provisions that protect downside?
He is widely attributed to be the founder of the high-yield bond market
Who is Michael Milken?
three types of priority
what is: temporal, structural, and contractual
The three main reasons for LME are...
What are maturity holiday, liquidity, and discount capture?
5 ways the debtor can increase liquidity ahead of a filing...
What is: cut growth capex, sale-leaseback, stretch payables, chase receivables, cut (any opex), asset sales, carveouts, fully draw revolvers, LMEs, etc
10% Note trading at 90c. 2 years until maturity. What is YTM?
(10% + 5% ) / (95%) = 15.8%
Which of the following most likely represents paper trading at a discount:
A. 8% coupon bond with a yield of 12%
B. A bond being refinanced during call protection period
C. 3% coupon, 20-year term bond with rates at 5%
D. All of the above
E. None of the above
What is A and C?
The net income of _____ _______ is excluded from covenant calculations
What are unrestricted subsidiaries?
The three MAIN types of LMEs are...
5 benefits of chp11...
What are the 360s
200 ABL Commitment, 200 A/R, 200 Inv, Borrowing Base is 85% A/R, 65% of Inv. 100 of both A/R and Inv are now ineligible. 50 is already drawn on ABL, 10 letters of credit outstanding, 20 in cash and another 10 in restricted cash. Liquidity is...
What is $110.
a CLO is...
What is a Collateralized Loan Obligation - a passive beta vehicle; a portfolio of leveraged loans packaged together and sold off at different tranches.
2 reasons for substantive consolidation
What is: creditors dealt with the entities as a single economic unit and did not rely on separate identities; the businesses are so intertwined that creating accurate, stand-alone financials would be impossible or expensive?
Name the three large basket capacities used to determine the LME...
What are: RP/PI, Debt Capacity, Permitted Liens?
walk me through the timeline of chp11 as best as you can...
First Day Hearings/Motions (Critical Vendors, 362, 364, 363k)
Biz as Usual (365, 363, UCC Formed)
Plan Confirmation (POR, Disclosure Statement Filed, Exclusivity Period, Solicitation, Confirmation --> What 4 tests...?
Exit (Claims Resolution, Avoidance Actions typically filed)
A bond with 3% coupon and 30yr term is bought with 3% YTM. After a year, one coupon payment is collected and the bond is sold with 10% YTM. Without using a calculator, what is the one year IRR of this investment?
What is roughly (67)%
Put price (generally) for a CoC
What is 101?
HoldCo: 100% equity in Op1 and Op2, 500U. Op1: 100 Ebitda, 8x, 400 secured, 200 unsecured. Op2: 1200 secured, 100m ebitda, 8x. What would holdco pay for a guarantee from Opco1?
What is 17c?
Provide three ways to make an exchange more coercive...
You are part of an AHG of 1L lenders going through a Chp11 proceeding. You propose an equitizing DIP at a 20% discount to plan value. The AHG of 2L lenders file a suit stating that this DIP is short-circuiting the formal court process - it is a ___ ___ plan...
What is sub-rosa?
Post petition take back debt is $100; we have $100 of an ERO (proceeds used to pay down part of DIP), at a 50% discount to plan value. The ERO equity split is only 80%. You have $50 of cash post-confirmation, but $25 is held in escrow. The post-reorg TEV is...
what is 325?
name 1 article in this week's edition of CRC...
what is any of the articles
Holdco: 200 unsecured bonds, 100 subordinated bonds; opco 1: 30 value, 75 trade debt; opco 2 40 value, 50 trade debt; opco 3: no value, 10 trade debt. all opcos guarantee holdco debt, the recovery to unsecured bonds is ____ and subordinated bonds is ___
what is ~29 and 0?
Prof. Dan Kamensky coined the term ____-_-_______ when referring to private equity firms' aggressive tactics to extend optionality when in distress.
What is sponsor-in-possession?