Insolvency waterfall and Model: Difference between pages

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imported>Doug Williamson
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''Insolvency - liquidation - claims.''
A representation of a real situation using a selected set of simplifying assumptions and relationships.  


The priority order of claims in an insolvency or liquidation.


Broadly speaking, this priority order is:
In finance, financial models are widely used as tools for valuation and to support financial decisions.


#Secured creditors
An important benefit of well-structured financial models is to facilitate sensitivity analysis.
#Preferential creditors
#Fixed charge creditors
#Floating charge creditors
#Unsecured creditors
#Connected unsecured creditors
#Shareholders
 
 
Sometimes abbreviated to ''waterfall''.
 
 
Breaching this ordering is a ''preference'', that can be effectively reversed by an order of the court.
 
 
:<span style="color:#4B0082">'''''Examine bank account arrangements'''''</span>
 
:"Geoff O’Dea, a partner at law firm Goodwin Procter... strongly recommends examining bank account arrangements, especially when you have more than one account at a single bank.
 
:'A lot of them will have covenants in their loan agreements that require you to bank with the institution.
 
:That was one of the issues with SVB with its clients amongst the VC, tech and life sciences community,' he says.
 
'For smaller companies, you might fit within the preferential rung in the insolvency waterfall, but if you're a large company, you’ll be an unsecured creditor for amounts above the [FSCS] £85,000 guarantee – so that's why you would need to examine that,' he says."
 
:''The Treasurer online - Risk Management & Strategy - Lawrie Holmes - 14 April 2023.''




== See also ==
== See also ==
* [[Covenant]]
* [[Agent based modelling]]
* [[Creditors]]
* [[Business model]]
* [[Financial Services Compensation Scheme]] (FSCS)
* [[Decision tree]]
* [[Fixed charge]]
* [[Financial model]]
* [[Floating charge]]
* [[Four-corner model]]
* [[Insolvency ]]
* [[Game]]
* [[Junior debt]]
* [[IRB]]
* [[Life sciences]]
* [[Model risk]]
* [[Liquidation]]
* [[Modelling]]
* [[Preference]]
* [[Mostly positive]]
* [[Preferential]]
* [[Scenario analysis]]
* [[Preferential creditor]]
* [[Sensitivity analysis]]
* [[Secured creditor]]
* [[Shadow model]]
* [[Security]]
* [[Stress test]]
* [[Senior debt]]
* [[Three-corner model]]
* [[Seniority]]
* [[Silicon Valley Bank]] (SVB)
* [[Subordinated debt]]
* [[Tech]]
* [[Unsecured debt]]
* [[Venture capital]] (VC)
* [[Waterfall]]
* [[Waterfall methodology]]


[[Category:Accounting,_tax_and_regulation]]
[[Category:The_business_context]]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Corporate_finance]]
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[[Category:Risk_frameworks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Risk_reporting]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 15:06, 19 February 2020

A representation of a real situation using a selected set of simplifying assumptions and relationships.


In finance, financial models are widely used as tools for valuation and to support financial decisions.

An important benefit of well-structured financial models is to facilitate sensitivity analysis.


See also