Valuation Dispute Lawyers in Fort Lauderdale
Filing for bankruptcy can be lengthy and taxing if you lack experienced legal representation. The lawyers at Stok Kon + Braverman can skillfully navigate the bankruptcy process and protect the rights of debtors and creditors alike. We have helped numerous businesses resolve their debts. We understand the intricacies of valuation disputes and can help you pursue a favorable outcome for your company.
Valuing the Assets of a Business in Bankruptcy
Valuation disputes generally arise in Chapter 11 bankruptcy cases. If a company files for bankruptcy under Chapter 11, that means that the company is not planning to close down and liquidate its assets as occurs in a Chapter 7 bankruptcy. Instead, the company is planning to restructure and reorganize in hopes of becoming a viable, profitable entity.
One of the first steps in Chapter 11 bankruptcy is determining the value of the company itself—this is called valuation. Valuation is important because assigning value to the company helps determine the amount of debt that can be repaid to creditors. If debtors and creditors cannot agree on the value of a company, then the parties litigate in bankruptcy court to determine exactly how much the business entity is worth.
Another term for this litigation is a valuation dispute. A valuation dispute is essentially a two-part process. First, valuation experts for both the debtor and the creditors present their theories regarding how to calculate the value of the company. Experts for both sides are called to testify and explain to the bankruptcy judge how much they think the company is worth and how they arrived at this conclusion. After the experts have presented their valuation theories, the second part of the process begins: the judge evaluates the expert testimony. After analyzing and evaluating the various theories of valuation, the judge will then make a ruling regarding how much they believe the company is worth.
Valuation litigation plays an important role in the Chapter 11 bankruptcy process, in part because of the abstract, highly subjective nature the process. There are many available theories to employ to determine the value of a business, and a judge’s perception of or attitude of the valuation theory plays a large part in the eventual outcome or valuation of a company. There are a number of theories used to determine the value of a company, such as the Discounted Cash Flow method (DCF). Using this method, a company’s value is determined, in part, by estimating the value of its future earnings at present day value. However, predicting a company’s future performance is highly subjective. Thus, valuation experts for both the creditor and debtor could arrive at two completely different numbers using this method. An experienced attorney can persuasively argue their side’s position, and skillfully explain why their valuation theory and estimate of the company’s value should prevail.
Stok Kon + Braverman has a team of skillful attorneys who can persuasively argue for both debtors and creditors in the Chapter 11 bankruptcy process. We serve businesses throughout Broward County. Our legal team includes lawyers as well as professionals with business planning experience that is relevant to your bankruptcy needs.