Thank you,Sal! I was wondering what is bankruptcy restructuring for a long long time,and I never figure it out,and no one would explain it in a clear way. But,oh my god,I love your video too much,that you can explain everything in such a short video and makes everything easy to understand! Love u,Sal!
Sal... He's the man who taught me pre-algebra, He's the man who taught me organic chemistry and the man who taught me how to invest in companies out of bankruptcy.
Thank you! The company I work for has filed chapter 11 and I didn’t know exactly what all that meant, you explained it really well for a newbie. Maybe look into updating your drawings so it’s easier to read and follow a little better as far as images go. Again thanks!
Great video. 1) What program are you using to make this video? 2) Who decide's the Equity holder's plan or the Debtor's plan is what is executed? The bankruptcy court?
First off, I like your video! Great info here!!! BUT what happens if the "old equity" (aka the common shares) is NOT wiped out?!? What happens if the common shares are saved?
Jhovany Ruiz then the old shareholders survive. Unfortunately today many of the corporations that leveraged themselves to kingdom come are being bailed out by the federal government. They’ve completely forgotten this mechanism of bankruptcy because they’re too scared companies won’t be able to secure DIP financing in order to keep the lights on while bankruptcy proceedings begin. Those companies will still likely see massive layoffs in the fourth quarter-even though their loan money has several conditions attached (no buybacks, keeping all employees through 9/31/20). It’s corporate socialism and it’s absurd
Sal, assuming the asset got valued at 8m$, and 2m$ of new equity is assigned to old equity holders, do the old equity holders absorb all the 50% loss in such arrangement?
So, since HTZ stock price is getting higher now, is it fair to assume that debt holders will get a smaller chunk of the divided equity giving more room for old shareholders to stil maintain their shares of the comapny?
Allama Sadi There was no cash to begin with. When the value of the company goes down, shareholder equity goes down. The value of their shares is $0. Like if your house gets damaged, the value of the house goes down, you didn’t lose actual cash but your net worth went down.
Doesn't the DIP get paid off first with the $2M of debt? The overall liabilities was $2M + $6M = $8M during restructuring, and the final asset value was $5M, so DIP gets $2M and remaining $3M goes to senior lenders
Basically yes. As long as the valuation is lower than the debt yes. If the valuation is higher than the debt, the old shareholders will get the remaining part between the debt and the valuation.
At 12:47 you say that the 2 mil out of the 8 mil of new equity will go to the old shareholders, and at 12:35 you say the 6m will go to the debt holders. But the six million does not include the DIP which is the most senior. Can someone please explain this to me
I have one question would like to confirm, so if one day the company will operating back on track, stock prices goes up, then after pay the all debts, the old equity holders which are like stockholders still possible to have their money back? is it right?
in chapter 7s shareholders usually lose ownership. while in chapter 11s the shares just lose a lot of their value. however, if a company successfully recovers from a chapter 11, the share prices will rise rapidly as investor confidence is restored and people buy a lot of shares, driving the price up.
Rookie question maybe, but you keep referring to the debtholders/debtors as if they're creditors. An example is when you indicate, "these guys (assets) didn't have enough cash to pay off their debt holders" or, "then you subtract the cash that has to be used to pay the debtholders". Why is it debt holders are the entity that is being paid when the debtor is the one who pays off the creditor? I think I am missing something terminology-wise!
but if that is true then what happens in the case where a stock holder demands their share of the assets. after all, under law, all share holders of a company that folds or goes bankrupt have a right to their share of assets.
It's so scummy that the initial equity holders are wiped out even though the company is worth something. Bondholders/debtholders are king in this case. This is why it's not a great idea for no name companies to be invested into.
Guantanomo Black why is scummy? The major shareholders in the prices are mainly executives in hedge funds who facilitated massive fiber ask artificially inflate their stock values. $.90 on the dollar from the S&P 500 in the last 10 years were funneled into buybacks. Companies were borrowing money to buy back their own stock. That’s just being stupid. If you take on too much risk and debt and blow up, that’s your own fault. Take the DIP financing to keep the employees there and the lights on. But that doesn’t mean that you need to reward reckless investment behavior with a bail out
Hi my name is Randy I looking for help I,m in Debt up to my ears in personal loans I have file Chapter 7 before but now I have to file Chapter 11.I,m broke in I can,t even afford a Attorney to get myself out of Debt.I looking to see if anyone no,s a Pro Bono Attorney that could take my case I do have a job if any fee,s are invovled I migth be able to make some payments
I've seen your replies and info on quorum, surprised to see you here. Great admirer of what you've accomplished and wish I knew half of what you know. I'm just trying to gather different business models to achieve certain goals as I ride the train of business in life.
I'm here because a lot of companies are filing this type of bankruptcy right now (coronavirus time) and I'm learning how to trade.
Oh
Can you believe what happened since this post?
@@mcoz7557 Can you believe what happened since your post?
Thank you,Sal!
I was wondering what is bankruptcy restructuring for a long long time,and I never figure it out,and no one would explain it in a clear way.
But,oh my god,I love your video too much,that you can explain everything in such a short video and makes everything easy to understand!
Love u,Sal!
Sal... He's the man who taught me pre-algebra, He's the man who taught me organic chemistry and the man who taught me how to invest in companies out of bankruptcy.
Thank you! The company I work for has filed chapter 11 and I didn’t know exactly what all that meant, you explained it really well for a newbie. Maybe look into updating your drawings so it’s easier to read and follow a little better as far as images go. Again thanks!
It's not arbitrage. It could just be a way to buy the "New Equity" before the "New Equity" really exists.
Hi could I get you're phone number.
Good job! Better than going to school.
Great series!
Thank you for clearing this up. Great video!
Great video.
1) What program are you using to make this video?
2) Who decide's the Equity holder's plan or the Debtor's plan is what is executed? The bankruptcy court?
Great for visual learners like myself! I like your teaching style
Excellent Presentation. Thanks!
This is GOOD stuff!!! Excellent training, as I am working with a Law Firm that specializes in Chapter 11 Unsecured Creditors Committees.
Thanks a lot for the really clear explanation.
excellent. very well presented.
First off, I like your video! Great info here!!! BUT what happens if the "old equity" (aka the common shares) is NOT wiped out?!? What happens if the common shares are saved?
Jhovany Ruiz then the old shareholders survive. Unfortunately today many of the corporations that leveraged themselves to kingdom come are being bailed out by the federal government. They’ve completely forgotten this mechanism of bankruptcy because they’re too scared companies won’t be able to secure DIP financing in order to keep the lights on while bankruptcy proceedings begin. Those companies will still likely see massive layoffs in the fourth quarter-even though their loan money has several conditions attached (no buybacks, keeping all employees through 9/31/20). It’s corporate socialism and it’s absurd
Sal, assuming the asset got valued at 8m$, and 2m$ of new equity is assigned to old equity holders, do the old equity holders absorb all the 50% loss in such arrangement?
Yes, that's why equity is riskier.
How can I become a DIP lender?
Look into Marc Lasry, Sonia Gardner, and the Avenue Capital Group
Great information, thanks for sharing.
Good explanation.
your explanation is very good :)
thanks
The equity might be very illiquid, so maybe they can't turn their equity into cash fast enough or efficiently enough to pay off the debtors.
Here because of bbby. Thanks for the schooling. 👍
Nice presentation. Seems like the only companies that made it out of Chapter 11 had government assistance. The success rate is still
So, since HTZ stock price is getting higher now, is it fair to assume that debt holders will get a smaller chunk of the divided equity giving more room for old shareholders to stil maintain their shares of the comapny?
So what actually happens to the money after the shareholders get wiped out? Does it automatically go to the brokerage company?
Allama Sadi There was no cash to begin with. When the value of the company goes down, shareholder equity goes down. The value of their shares is $0. Like if your house gets damaged, the value of the house goes down, you didn’t lose actual cash but your net worth went down.
Doesn't the DIP get paid off first with the $2M of debt? The overall liabilities was $2M + $6M = $8M during restructuring, and the final asset value was $5M, so DIP gets $2M and remaining $3M goes to senior lenders
So can you clarify? Will the old stock be wiped out to make way for the new shares?
Basically yes. As long as the valuation is lower than the debt yes. If the valuation is higher than the debt, the old shareholders will get the remaining part between the debt and the valuation.
good job
Mark Zhang
Thanks Mark
who's in here because of htz? lol
Dnr lol
TLRD :D
@@SR1919 same LOL RIP
NE 😅😅😅
At 12:47 you say that the 2 mil out of the 8 mil of new equity will go to the old shareholders, and at 12:35 you say the 6m will go to the debt holders. But the six million does not include the DIP which is the most senior. Can someone please explain this to me
240p we meet again
Is any of this related to cramdowns?
I have one question would like to confirm, so if one day the company will operating back on track, stock prices goes up, then after pay the all debts, the old equity holders which are like stockholders still possible to have their money back? is it right?
Feb 2009 you showed a case of GM going bankrupt. June 2009 they went bankrupt.. Almost everything you prophesied in these videos turned out right
Thanks Buddy
kapil sharma
You are welcome
hey i love your videos your soo cool can you make a video about irregular polygons thankz bye=] Fizza
What happens to equity holders if the sale of the assets are enough to cover the debt?
in chapter 7s shareholders usually lose ownership. while in chapter 11s the shares just lose a lot of their value. however, if a company successfully recovers from a chapter 11, the share prices will rise rapidly as investor confidence is restored and people buy a lot of shares, driving the price up.
I'm just here to find out if I should make some htz calls lol
BBBYQ will be your next BK case study.
Rookie question maybe, but you keep referring to the debtholders/debtors as if they're creditors. An example is when you indicate, "these guys (assets) didn't have enough cash to pay off their debt holders" or, "then you subtract the cash that has to be used to pay the debtholders". Why is it debt holders are the entity that is being paid when the debtor is the one who pays off the creditor? I think I am missing something terminology-wise!
#SEARS
So JCPNQ would be the old and we have to wait on the new ticker?
@Bo Blac Yes
Anyone here after Evergrande announced restructure?
Okay, so my Hertz stock is zero now.
Mine too i_i
And I am thinking of investing in it right now. Maybe I’ll take a small risk. I don’t know
@@dhawalkataria3068 Or it's already delisted
wassollderscheiss33 it see it still trading at 1.83, if it is delisted my order will get canceled. So shouldn’t be a problem but thanks.
wassollderscheiss33 Did you receive an email or something? That it’s delisted.
Do stockholders always lose when going through Chapter 11: Bankruptcy ?
True
3:00
if company couldn't pay interest on debt from generating cash, why can't they just pay him off from equity?
I know this comment was 6-yr-old but for anyone is wondering the same question. The reason is that corporation structure has limited liability.
thank you xD bandits
Is it me or did he not explain the impact of DIP fanincing on the balance sheet?
This is what the NBA would have had to do were it not for Larry Bird.
but if that is true then what happens in the case where a stock holder demands their share of the assets. after all, under law, all share holders of a company that folds or goes bankrupt have a right to their share of assets.
what do you mean more "senior debt"?
I'd imagine older debt, something that was meant to be payed off earliest.
Why do banks want to undervalue a company in bankruptcy?
Because I thought banks have no interest in running a business?
So if AMC files chapter 11 and I own 100 shares, will I get any new shares or will I just lose everything
Lose it
You lose it as long as the valuation is lower than the debt.
Hope you didn't miss out on the AMC blow out last week.
My understanding of this topic is limited since I have had to file for bankruptcy 0 instead of 6 times :)
hmmm...
Do you honest believe it ?
It's so scummy that the initial equity holders are wiped out even though the company is worth something. Bondholders/debtholders are king in this case. This is why it's not a great idea for no name companies to be invested into.
Guantanomo Black why is scummy? The major shareholders in the prices are mainly executives in hedge funds who facilitated massive fiber ask artificially inflate their stock values. $.90 on the dollar from the S&P 500 in the last 10 years were funneled into buybacks. Companies were borrowing money to buy back their own stock. That’s just being stupid. If you take on too much risk and debt and blow up, that’s your own fault. Take the DIP financing to keep the employees there and the lights on. But that doesn’t mean that you need to reward reckless investment behavior with a bail out
DIP is only senior to unsecured stuff dude.
Salman Khan for president
What do you mean say these guys eat up interest? 2:41
RIP FTX
Hi my name is Randy I looking for help I,m in Debt up to my ears in personal loans I have file Chapter 7 before but now I have to file Chapter 11.I,m broke in I can,t even afford a Attorney to get myself out of Debt.I looking to see if anyone no,s a Pro Bono Attorney that could take my case I do have a job if any fee,s are invovled I migth be able to make some payments
your making me dizzy , with your mouse
This video is hopelessly confusing and useless.
I've seen your replies and info on quorum, surprised to see you here. Great admirer of what you've accomplished and wish I knew half of what you know. I'm just trying to gather different business models to achieve certain goals as I ride the train of business in life.
horrible video, you should learn more from Investopedia videos - they are much shorter and more self-explanatory
8:44
"Who is this guy?"
They must have called him in from the unemployment line or retirement home talking immigrating from russia yeah right
@ college of dupage