Insolvency waterfall and Model: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Layout.)
 
imported>Doug Williamson
(Add link.)
 
Line 1: Line 1:
''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]]
Line 67: Line 32:
[[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

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Insolvency_waterfall&oldid=32689’