This case is appropriate for advanced undergraduates or the MBS students who have finished a course in the corporate finance or the valuation. The stuff would fit nicely in a second Corporate Finance class, particularly if the instructor wants to devote some time to discussing restructuring and financial distress. It may also work nicely in a business reorganization course at a law school. The nearly 50-year old business is seeking a restructuring of its own capital structure that may permit the firm to live and has lately blown through cash flow covenants on its $100 million senior funding facility.
Although Danfurn's lenders are optimistic that a consensual choice can be accomplished on how to restructure the business without filing for bankruptcy resorting to a bankruptcy filing or liquidating the firm are very real chances. This case scenario is an exercise in conversing a consensual reformation of a financially troubled business when stakeholders have varied potential remedies, legal rights, bonuses, and interests in the way in which the company will be managed going forward. The case discussion works best if pupils are broken up into diverse groups representing the various groups – the senior lender, mezzanine lender, the board, private equity owner and founder interests - are asked to think about how best to optimize their standings while recognizing the costs of failing to achieve a negotiated outcome.
The Restructuring of Danfurn LLC Case Study Solution
PUBLICATION DATE: January 22, 2013 PRODUCT #: UV6882-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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