第三十一章资料新 财务困境(PPT 24页)
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31-0
Executive Summary
• This chapter discusses financial distress, private workouts, and bankruptcy.
• A firm that defaults on a required payment may be forced to liquidate its assets. More often, a defaulting firm will reorganize.
Contractual obligations
Firm cash fHale Waihona Puke Baiduow
Insolvency
time
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-5
The Largest U.S. Bankruptcies
McGraw-Hill/Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-2
31.1 What is Financial Distress?
• A situation where a firm’s operating cash flows are not sufficient to satisfy current obligations and the firm is forced to take corrective action.
Firm
Liabilities ($m) Bankruptcy Date
Texaco Executive Life Insurance
$21,603 14,577
1987 1991
Mutual Benefit Life
13,500
1991
Campeau First Capital Holdings
9,947 9,291
31-6
31.2 What Happens in Financial Distress?
• Financial distress does not usually result in the firm’s death.
• Firms deal with distress by
– Selling major assets. – Merging with another firm. – Reducing capital spending and research and development. – Issuing new securities. – Negotiating with banks and other creditors. – Exchanging debt for equity. – Filing for bankruptcy.
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-1
Chapter Outline
31.1 What is Financial Distress? 31.2 What Happens in Financial Distress? 31.3 Bankruptcy Liquidation and Reorganization 31.4 Private Workout or Bankruptcy: Which is Best? 31.5 Prepackaged Bankruptcy 31.6 Summary and Conclusions
• Financial restructuring involves replacing old financial claims with new ones and takes place with private workouts or legal bankruptcy.
McGraw-Hill/Irwin
• Financial distress may lead a firm to default on a contract, and it may involve financial restructuring between the firm, its creditors, and its equity investors.
McGraw-Hill/Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-3
Insolvency
• Stock-base insolvency; the value of the firm’s assets is less than the value of the debt.
1990 1991
Baldwin United Continental Airlines (II)
9,000 6,200
1983 1990
Lomas Financial Macy’s
McGraw-Hill/Irwin
6,127
1989
5,300
1992
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-4
Insolvency
• Flow-base insolvency occurs when the firms cash flows are insufficient to cover contractually required payments.
$
McGraw-Hill/Irwin
Cash flow shortfall
Solvent firm
Insolvent firm
Assets
Debt Equity
Assets
Debt Equity
Debt
McGraw-Hill/Irwin
Note the negative equity
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Executive Summary
• This chapter discusses financial distress, private workouts, and bankruptcy.
• A firm that defaults on a required payment may be forced to liquidate its assets. More often, a defaulting firm will reorganize.
Contractual obligations
Firm cash fHale Waihona Puke Baiduow
Insolvency
time
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-5
The Largest U.S. Bankruptcies
McGraw-Hill/Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-2
31.1 What is Financial Distress?
• A situation where a firm’s operating cash flows are not sufficient to satisfy current obligations and the firm is forced to take corrective action.
Firm
Liabilities ($m) Bankruptcy Date
Texaco Executive Life Insurance
$21,603 14,577
1987 1991
Mutual Benefit Life
13,500
1991
Campeau First Capital Holdings
9,947 9,291
31-6
31.2 What Happens in Financial Distress?
• Financial distress does not usually result in the firm’s death.
• Firms deal with distress by
– Selling major assets. – Merging with another firm. – Reducing capital spending and research and development. – Issuing new securities. – Negotiating with banks and other creditors. – Exchanging debt for equity. – Filing for bankruptcy.
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-1
Chapter Outline
31.1 What is Financial Distress? 31.2 What Happens in Financial Distress? 31.3 Bankruptcy Liquidation and Reorganization 31.4 Private Workout or Bankruptcy: Which is Best? 31.5 Prepackaged Bankruptcy 31.6 Summary and Conclusions
• Financial restructuring involves replacing old financial claims with new ones and takes place with private workouts or legal bankruptcy.
McGraw-Hill/Irwin
• Financial distress may lead a firm to default on a contract, and it may involve financial restructuring between the firm, its creditors, and its equity investors.
McGraw-Hill/Irwin
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-3
Insolvency
• Stock-base insolvency; the value of the firm’s assets is less than the value of the debt.
1990 1991
Baldwin United Continental Airlines (II)
9,000 6,200
1983 1990
Lomas Financial Macy’s
McGraw-Hill/Irwin
6,127
1989
5,300
1992
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.
31-4
Insolvency
• Flow-base insolvency occurs when the firms cash flows are insufficient to cover contractually required payments.
$
McGraw-Hill/Irwin
Cash flow shortfall
Solvent firm
Insolvent firm
Assets
Debt Equity
Assets
Debt Equity
Debt
McGraw-Hill/Irwin
Note the negative equity
Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.