Bankruptcy decision rejects standard three-year income projections
Have you ever used a business’s three-year historical annual average to project sales and revenue growth, EBITDA or capital expenditures? Have you ever used the term “zone of insolvency” to describe a business on the brink of bankruptcy? Does your valuation report sometimes omit the precise formula used in your DCF? If you answered “yes” [...]
Just because a valuation method is “standard” doesn’t mean you can’t challenge it under Daubert
At least half a dozen new Daubert challenges to financial experts came in this month, each attacking the relevance and reliability of the valuation evidence (or the valuator’s qualifications). In some complex bankruptcy and securities litigation cases, Daubert challenges are now even testing “standard” methods, from proven experts. For example, an otherwise qualified expert valued a [...]
Can buy-sell agreements bind the non-signing spouse?
In a case of first impression, the Texas Court of Appeals considered a buy-sell agreement that purported to bind shareholders and their spouses in the event of divorce. As a further complication, the husband had signed an employment agreement with the private medical association—but neither he nor his wife had signed the shareholders’ agreement. This [...]
Buy-Sell value stands after expert is discredited in shareholder buy-out case
In re White, 2010 WL 786292 (Bkrptcy. S.D. Tex.)(March 4, 2010) The federal bankruptcy court first found that $4.9 million in executive bonuses paid by a profitable construction equipment company over a span of two years (2006 and 2007) were in fact disguised dividends. “Uncontroverted” testimony at trial established that the company paid shareholder-employee bonuses [...]
New articles on business valuation in bankruptcy cases
Few lawyers follow analyses from Willamette Management Associates, but some new material is worth keeping in your library. It’s available to subscribers of BVResearch. The new content includes special-focus articles on bankruptcy and reorganization analyses by noted Willamette experts Robert Reilly, Charles Wilhoite, and: Financially Troubled Company Purchase/Sale Transaction Structure Issues by Scott Cobb and Nguyen “Wen” [...]
Three bankruptcy cases show the value of financial experts
The current fiscal crisis is now providing test cases for bankruptcy courts and financial experts. These three (one is an outgrowth of the S&L scandal) provide a sobering look at what plagues the economy and how valuation analysts are critical to the ensuing litigation. Caught between boom and bust. After rapidly expanding during the housing [...]
Court increases discount rate to reflect current market conditions
Miller Bros. Coal v. Consol of Kentucky, Inc, 2009 WL 4904032 (Bkrtcy. E.D. Ky.))(Dec. 11, 2009) Cases on the appropriate discount rate are relatively rare, so even this brief discussion by a federal bankruptcy court provides current guidance to lawyers on how current economic conditions may impact value. Downturn is not an ‘act of God.’ [...]
Will this litigation expert ever testify again?
When the largest homebuilder in the country (TOUSA, Inc.) went bankrupt, the committee of unsecured creditors sought to recover nearly $600 million from the company’s “disastrous” refinancing deal with Citigroup bank (its advisor was Lehman Bros.). Both sides enlisted teams of valuation, real estate, restructuring, and cost/construction experts—who, for the most part, proved credible to [...]
Share your thoughts..