Modelling for Stressed and Distressed Companies

£1,300.00 +VAT


This course can be presented face to face in-house or via live in-house webinar.

Modelling for Stressed and Distressed Companies Course Objectives:

Participants will:

  • Learn about stressed and distressed companies including capital structure analysis &  financing issues
  • Be appraised of using credit ratios to assess credit risk and understanding structural issues
  • Get to grips with assessing refinancing risk, market data, debt terms & conditions including different debt products and which companies realistically have access to them
  • Gain an understanding of insolvency and valuation modelling the link between enterprise value and equity value
  • Be taught about  strategic options, subordination, valuation methodologies including valuation issues
  • Have explained to them recovery values, recognising priority ranking
  • Be taught about the modelling of the debt under restructuring scenarios and Valuation of companies under different options

Modelling for Stressed and Distressed Companies Course Content:



This module focuses on the analysis of companies that are solvent, but might become distressed should trading or financing circumstances deteriorate. We focus on operating cash flow dynamics (e.g. cash conversion), capital structure issues (e.g. understanding structural issues and assessing refinancing risk) and valuation implications.


  • Definition and review of stressed companies
  • Introduction to Dominos Pizza stressed situation

Capital structure analysis

  • Using credit ratios to assess credit risk (e.g. debt / EBITDA, EBITDA / interest)
  • Understanding structural issues
    • Cash flow upstreaming issues and structural subordiantion issue
    • Intercompany debt guarantees, multiple borrowers with joint & several liability, intercompany loans, etc.
  • Assessing refinancing risk
  • Market data (credit “spread” to measure credit risk, bond prices & bond yields, CDS and credit indices), sources and reliability of data

Financing issues

  • Different debt products and which companies realistically have access to them and what creditors look for in re-financing / new financing
  • Debt terms & conditions including credit ratio covenants and the potential to trigger early debt repayment

Case study I – Dominos Pizza – detailled modelling and full credit analysis



This module focuses on the analysis of companies that have become distressed. We focus on reviewing the capital structures and model different alternatives, including liquidation and restruturing the debt package taking into acccunt the perspectives of the different equity and debt holders.

Insolvency and Valuation

  • Balance sheet involvency
  • Cash flow insolvency
  • Link between Entreprise Value and Equity Value
    • Equity value is zero and debt trades below book values


  • Secured vs. unsecured
  • Contractual
  • Structural
  • Guarantees

Strategic Options

  • Raising capital
  • Debt restructuring (out-of-courts)
  • Debt restructuring (in-court)
  • Asset sales
  • Sell the business
  • Liquidation

Valuation Methodologies

  • Liquidation vs. going concern
  • Liquidation value
    • Recovery rate
  • Going concern
    • EBITDA multiples

Valuation issues

  • Limited time for due diligence
  • Usefulness of historical record as a proxy for the future
  • Management issues


Recovery Values

  • Asset liquidation value usually estimated as a % of book value
  • Most liquid assets (cash and marketable securities): 100% recovery rate
  • For most assets only a fraction of book value recoverable
  • Liquidation fees

Case Study II: Modelling of different recovery values of an industrial company

Priority Ranking

  • Contractual subordination
    • Senior, subordinated, preferred and equity
  • Security
  • Structural subordination
    • Borrowing entity
    • Maturity
    • Guarantees

Distressed Companies – Financial Modelling

  • Workout of Schefenacker, a German auto-parts manufactuer
  • Valuation of companies under different options
    • Going concern, liquidation and restructuring
  • Modelling of the debt under restructuring scenarios
    • Debt forgiveness, payment extensions, debt-equity swaps

Case study III – Detailed modelling of Schefenacker workout

Background of the trainer:

The trainer has 15 years of experience in accounting and investment banking at leading firms and is an experienced financial trainer who has delivered courses for financial institutions in the City of London and around the world, in the areas of Corporate Finance, Valuation (Industrials and Banks), Financial Modelling, M&A, LBO, Financial Accounting, Capital Markets, Bank Regulatory Capital, Financial Risks, both in English and French.

Modelling for Stressed and Distressed Companies Course Summary:

This course focuses on modelling restructuring for stressed and distressed companies.

First, we analyse stressed corporate from a credit analysis perspective and model the debt payment and key credit ratios. We then look at gone-concern scenarios and review distressed companies. We explore and model the steps facing distressed corporates, including debt restructuring packages, in-court and out-of-court settlements and liquidation. We look at the perspective of distressed corporates, debt holders and creditors.

At the end of the training, the participants will be able to:

  • Explain the differences between a stressed and a distressed company
  • Understand the valuation of a distressed company
  • Model the various options for the debt holders and creditors of a distressed company
  • Model the pecking order of debt repayment in a liquidation
What Redcliffe’s clients are saying about the course:


“Practical, relevant and fun – well chosen case studies and easy to follow course work.”

            M&A Associate, Goldman SachsImage result for goldman sachs

“High quality of practical examples and loved the enthusiasm of the lecturer.”

  Corporate Finance Associate, Deloitte

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“The direct modelling in excel was very helpful”

           Restructuring Analyst, NIBC

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25-26 September 2018, 26-27 March 2019, 22-23 October 2019