Question of the day
2026-07-24
Give the formula for a class's recovery percentage and apply it: a class has a $250M claim and receives $90M of cash plus new equity worth $35M.
Answer it out loud first — like you would in the room. Then check yourself:
Reveal the model answer
Model answer
Recovery % = (value of consideration received) / (allowed claim amount). Here consideration = $90M cash + $35M equity = $125M. Recovery % = $125M / $250M = 50%. Key nuances: use the ALLOWED claim (which can differ from face if there are disputes, accrued interest, or make-wholes), and value non-cash consideration (new debt at market, new equity at plan value), which is itself a negotiation point.
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