The Evolution of Valuation in Bankruptcy

  title={The Evolution of Valuation in Bankruptcy},
  author={Michael N Simkovic},
  journal={Risk Management eJournal},
  • M. Simkovic
  • Published 16 July 2016
  • Economics
  • Risk Management eJournal
Financial analyses such as valuation, solvency and capital adequacy play a crucial role in bankruptcy. Over the course of the 20th century, methods of financial analysis in bankruptcy have shifted from earnings multiples to discounted cash flow (DCF) and recently to market-based approaches such as auctions, market pricing of equity and unsecured debt, and credit spreads. Each shift in bankruptcy court practice followed shifts in financial services industry practice and developments in academic… 

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ORPORATIONS that have entered a Chapter 11 bankruptcy proceeding have chosen to develop a plan to reorganize their capital structure rather than pursue the less time-consuming liquidation option

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