Michael Rigby
Managing Director and Tax Valuation Services Co-Leader
Valuation Advisory Services
Chicago
Out-of-Court Debt and Equity Restructuring
Valuation, accounting and tax advice to assist companies navigate complex out-of-court debt and equity restructurings.
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How We Help Clients Navigate Complex Debt and Equity Restructuring Scenarios
Debt and equity restructuring is a common strategy for companies facing financial distress or seeking to manage their capital structure. However, these restructurings can also trigger significant tax and accounting implications that require careful analysis. Kroll offers a comprehensive suite of services to help you evaluate, execute and report on debt and equity restructuring transactions such as debt modifications, settlement of debt in exchange of equity, or issuance of convertible debt/equity instruments.
Why Clients Choose Kroll
Minimal Independence Challenges
Led by Experts
Integrated Expertise
Seamless Engagement
100-year History
Our Expertise
Post-Restructured Debt (and Equity) Valuation
We help assess the fair value of your debt and equity instruments before and after restructuring, when market pricing is unavailable, using yield benchmarking and option pricing techniques like Black-Scholes, Monte Carlo or lattice models.
Insolvency Exception
We perform a valuation of the business enterprise to help you determine the amount of any insolvency exception under IRC Section 108, which reduces the amount of cancelation of debt income (CODI) by the amount the entity is insolvent prior to restructuring.
Section 382 NOL Studies and Attribute Preservation and Reduction Analysis
We help determine if a debt modification triggers an ownership change under IRC Section 382, potentially limiting your use of net operating losses (NOLs) and tax attributes. Our 382 NOL study tracks ownership changes and calculates the Section 382 limitation.
Business Combination
If the restructuring triggers a change in control, the transaction may need to be accounted for as a business combination under ASC 805. We provide PPA valuation and purchase accounting support, including opening balance sheet preparation, technical memo drafting and financial disclosures.
Accounting for Debt Modification / Extinguishment
We assist with accounting assessments and documentation for debt restructuring, including journal entries, calculations and footnote disclosures per applicable standards. This includes troubled debt and debt modification assessments (10% Test) and calculating any gain or loss from debt extinguishment in exchange for equity or cash, if applicable.
Embedded Derivative Assessment
We assist with the timely identification of embedded derivatives in newly issued financial instruments such as convertible note, preferred stock, term loan and other equity-based contracts which may include embedded puts, calls, conversion options or other contractual features that meet the definition of a derivative and are required to be recorded at fair value.
Equity Instruments
We assist you in determining the accounting treatment of equity instruments that are issued as part of the debt/equity restructuring. Our services include assessing initial classification (equity or liability), analyzing equity issued in restructuring schemes, such as the exchange of existing equity or the conversion of convertible notes.
Transaction Advisory Services
Kroll’s Transaction Advisory Services platform offers corporate and financial investors with deep accounting and technical expertise, commercial knowledge, industry insight and seamless analytical services throughout the deal continuum.
Alternative Asset Advisory
Heightened regulatory concerns and vigilance, together with increased investor scrutiny, have led to increased demand for independent expert advice.
Portfolio Valuation
Kroll specializes in assisting clients with the valuation of alternative investments, specifically securities and positions for which there are no "active market" quotations.
Kroll is headquartered in New York with offices around the world.
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