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Out-of-Court Debt and Equity Restructuring

Valuation, accounting and tax advice to assist companies navigate complex out-of-court debt and equity restructurings.

How We Help Clients Navigate Complex Debt and Equity Restructuring Scenarios

Debt and equity restructuring is a common strategy for companies facing financial distress, refinancing existing obligations, addressing liquidity needs, or seeking to optimize their capital structure. These transactions often create complex accounting, tax, and valuation considerations that require careful analysis and execution. We offer a comprehensive suite of services to help clients evaluate, execute and report on debt and equity restructuring transactions, including debt modifications, debt exchanges, debt-for-equity conversions, issuance of convertible or equity-linked instruments, and other restructuring transactions.

Why Clients Choose Kroll

Challenge
Minimal Independence Challenges
Experts
Led by Experts
Integrated Expertise
Integrated Expertise
Seamless Engagement
Seamless Engagement
History
100-year History

Our Expertise

Post-Restructured Debt (and Equity) Valuation

We help assess the fair market 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 Modifications and Extinguishments

We assist clients with the accounting and financial reporting implications of debt restructuring transactions, including debt modification and extinguishment assessments, gain or loss recognition, journal entries, technical accounting documentation, and financial statement disclosures. Our professionals have extensive experience advising on troubled debt restructurings, debt-for-equity exchanges, debt settlement arrangements, and the issuance of warrants, convertible instruments, or other investor incentives.

Embedded Derivative Assessment

We assist clients with identifying and evaluating embedded derivative features within newly issued or modified financial instruments, including convertible debt, preferred stock, term loans, and other financing arrangements. Our services include assessing contractual features such as conversion options, puts, calls, and other terms that may require separate accounting and fair value measurement under the applicable accounting standards.

Equity Instruments

We assist clients in evaluating the accounting and financial reporting implications of equity and equity-linked instruments issued in connection with debt and equity restructuring transactions. Our services include assessing classification, measurement and disclosure considerations for preferred equity, warrants, convertible instruments, and other equity-linked arrangements.

Stay Ahead with Kroll

Transaction Advisory Services

Kroll provides comprehensive due diligence, operational insights, and tax structuring support, assisting private equity firms and corporate clients throughout the deal lifecycle.

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Alternative Asset Advisory

Heightened regulatory concerns and vigilance, together with increased investor scrutiny, have led to increased demand for independent expert advice.

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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.

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