Commercially Reasonable Debt Opinions

Kroll Corporate Finance advises companies as to whether the economic terms of their intercompany debt are commercially reasonable.

Companies issue debt securities to related parties for numerous reasons. It is critical that such debt is respected as debt by tax authorities. One key factor in assessing if an intercompany debt should be characterized as debt for tax purposes is whether or not the terms of the debt are “commercially reasonable”, defined as being substantially similar to the terms to which an unrelated third party bargaining at arm’s length would reasonably be expected to agree.

Kroll’ advice can cover the amount of the proposed leverage in the capital structure, the interest rate on the debt, and the other economic terms of the debt security. In addition, Duff & Phelps Opinions practice is often requested to provide a financial opinion regarding the commercial reasonableness of the economic terms of the debt and the leverage in the company’s capital structure.

The following are typical transactions for which Duff & Phelps Opinions practice has been engaged to provide advice and opinions with respect to intercompany debt:

  • Multi-national companies utilizing intercompany debt in cross-border acquisitions or in recapitalization or restructuring transactions
  • Current equity holders of a company providing additional capital in the form of debt
  • Canadian Income Fund offerings and other similar transactions
 

For nearly 15 years, company management, boards of directors, trustees of income funds as well as tax attorneys and tax advisors have relied on Kroll’ advice and opinions to support their view that an intercompany debt security should be characterized as debt for tax purposes.

/en/services/corporate-finance/fairness-and-solvency-opinions/commercially-reasonable-debt-opinions /-/media/feature/services/corporate-finance/fairness-and-solvency-opinions-desktop-banner.jpg service

Contact Us

Stay Ahead with Kroll

Kroll Business services

Business Services

Technology-enabled legal and business solutions for corporate restructurings, settlement administrations, issuer services, agent and trustee services, and other complex support needs.

Business Services
Comprehensive Due Diligence Solution

Compliance and Regulation

End-to-end governance, advisory and monitorship solutions to detect, mitigate and remediate operational security, legal, compliance and regulatory risk.

Compliance and Regulation
Corporate Finance

Corporate Finance and Restructuring

Comprehensive corporate finance, investment banking, restructuring and insolvency services for investors, asset managers, companies and lenders.

Corporate Finance and Restructuring
Cyber Risk

Cyber Risk

Incident response, digital forensics, breach notification, managed detection services, penetration testing, cyber assessments and advisory.

Cyber Risk
Governance, Risk, Investigations and Disputes

Investigations and Disputes

World-wide expert services and tech-enabled advisory through all stages of diligence, forensic investigation, litigation and testimony.

Investigations and Disputes
Restructuring Advisory

Restructuring

Financial and operational restructuring and enforcement of security, including investigation, preservation and realization of assets for investors, lenders and companies.

Restructuring
Valuation Advisory

Valuation

Valuation of businesses, assets and alternative investments for financial reporting, tax and other purposes.

Valuation

Insights

M&A Advisory

Healthcare Services Sector Update – August 2021

M&A Advisory
M&A Advisory

Diagnostic Imaging Equipment Services Update – Summer 2021

M&A Advisory
M&A Advisory

SPAC Market Report – Q2 2021 Highlights

M&A Advisory