‘Dramatic’ Valuation Adjustment Justifies Equity Committee
In a rare nod to shareholder concerns, Bankruptcy Court approves formation of equity committee based on “dramatic adjustment in valuation” and inconsistent management positions as to financial health of debtors pre-Chapter 11 and post-petition filing.
In re Horsehead Holding Corp.
In a rare nod to shareholder concerns, Bankruptcy Court approves formation of equity committee based on “dramatic adjustment in valuation” and inconsistent management positions as to financial health of debtors pre-Chapter 11 and post-petition filing.
Lay Testimony About Offer to Buy Represents Admissible Valuation Evidence
Appeals court says nonexpert testimony on a real-world offer to buy owner-spouse’s company was relevant and, therefore, admissible because it provided valuation evidence based on market approach; court remands for rehearing on all valuation testimony.
More Valuation Data Do Not Ensure Fair Class Action Settlement
In stockholder class action, Chancery declines to approve settlement that requires plaintiffs to agree to broad release of claims in exchange for additional valuation-related information, finding it fails to meet applicable “fair and reasonable” standard.
Burtch v. Opus, LLC (In re Opus East, LLC) (II)
In Chapter 7 case, district court upholds Bankruptcy Court’s insolvency determination, which was a predicate to many of trustee’s claims; reviewing court says evidence supports use of going-concern valuation and rejection of liquidation discount.
Subsequent Transaction Too Remote to Allow for Reliable Valuation
In gift tax dispute involving decades-old transaction by a media magnate, Tax Court upholds IRS’s deficiency ruling and credits agency expert’s valuation of transferred stock based on a similar arm’s-length transaction occurring near the valuation date.
Bankruptcy Court Favors DCF to Value Dissociated Interest
Court finds debtor’s fraudulently conveyed interest represents a dissociated interest that is held by the estate; appropriate valuation date is date of trial, and DCF analysis, as modified by court, best captures value of the interest at that time.
Affirmation of DLOM Rulings Augurs End to Shareholder Fight
In dissenting shareholder suit, appeals court upholds trial court’s finding that prevailing DCF analysis did not account for illiquidity by way of a separate marketability discount, as well as court’s finding that appropriate DLOM rate was 25%.
NY fair value ruling deals blow to DLOM
The case featured experts whose professional backgrounds and valuation approaches could hardly be more dissimilar. Their value determinations were light-years apart. In trying to make sense of the conflicting testimony and achieve a plausible and fair result, the court decided it could not totally trust either valuation. Although it adopted the defense expert's valuation, it made two consequential changes to it. One was getting rid of the expert's admittedly high and insufficiently explained 35% discount for lack of marketability.
Verghetta v. Lawlor
In statutory fair value proceeding to enable buyout of minority interest in limited liability companies, New York court says prevailing expert opinion understates future income stream; court upward adjusts by eliminating DLOM and disallowing tax affecting ...
Court Excludes Pro Forma-Based Economic Damages Analysis
Court excludes plaintiffs’ DCF-based damages calculation, finding it suffers from “garbage-in, garbage-out” problem; plaintiffs’ experts based cash flow analysis on defendant’s preliminary projections rather than subsequently available actual sales data.
Value Determination Accords With Parties’ Contract, Chancery Says
Court says valuation firm’s determination of value of defendants’ put units accords with agreement to which plaintiff and defendants committed themselves; since contract does not provide for judicial review, court won’t “second-guess” valuator’s judgment.
New Jersey DLOM ruling inches ancient dissenting shareholder suit to conclusion
The parties' most recent fight focused on whether the prevailing expert's DCF analysis embedded a marketability discount to account for illiquidity. If not, the trial court had to decided what the appropriate DLOM rate was. The plaintiff-selling shareholder argued in favor of a zero DLOM, the defendants-buying shareholders presented an expert valuation that specified a 35% DLOM, based on the expert's use of a market approach.
Wheelabrator Bridgeport, L.P. v. City of Bridgeport
State high court says trial court’s categorical rejection of DCF method to value a special purpose plant for tax assessment purposes is improper where parties’ “experienced and knowledgeable” experts relied on it; court remands for new trial on valuation.
‘Reasonably Equivalent Value’ Analysis Meets FMV Standard, Court Says
On remand, Bankruptcy Court determines sale of plaintiff’s subsidiaries to defendants yielded “reasonably equivalent value” when viewed from objective creditor’s perspective, under FMV standard and without considering debtor’s subjective needs or beliefs.
Uncertainty Over Key Inputs Compromises DCF, Chancery Says
Chancery favors merger price, without synergy adjustment, over DCF-generated value, noting uncertainties over key inputs such as projections, equity risk premium, terminal growth rate as well as the “wildly divergent” DCF results of the parties’ experts.
In re Trulia Stockholder Litig.
In stockholder class action, Chancery declines to approve settlement that requires plaintiffs to agree to broad release of claims in exchange for additional valuation-related information, finding it fails to meet applicable “fair and reasonable” standard.
Destruction of financial evidence trips up guilty party's own experts
As a damages expert, what do you do when your own client has destroyed vital financial information? Two highly educated finance professionals working on a contract case solved this dilemma by relying exclusively on the opposing side's sales projections, only to see their analysis buckle under a Daubert challenge.
Berger v. Berger
Appeals court says nonexpert testimony on a real-world offer to buy owner-spouse’s company was relevant and, therefore, admissible because it provided valuation evidence based on market approach; court remands for rehearing on all valuation testimony.
PECO Logistics, LLC v. Walnut Inv. Partners, L.P.
Court says valuation firm’s determination of value of defendants’ put units accords with agreement to which plaintiff and defendants committed themselves; since contract does not provide for judicial review, court won’t “second-guess” valuator’s judgment.
Wisniewski v. Walsh (Wisniewski II)
In dissenting shareholder suit, appeals court upholds trial court’s finding that prevailing DCF analysis did not account for illiquidity by way of a separate marketability discount, as well as court’s finding that appropriate DLOM rate was 25%.
Hanckel v. Campbell (In re Hanckel)
Court finds debtor’s fraudulently conveyed interest represents a dissociated interest that is held by the estate; appropriate valuation date is date of trial, and DCF analysis, as modified by court, best captures value of the interest at that time.
Redstone v. Commissioner
In gift tax dispute involving decades-old transaction by a media magnate, Tax Court upholds IRS’s deficiency ruling and credits agency expert’s valuation of transferred stock based on a similar arm’s-length transaction occurring near the valuation date.
Chancery Lauds Advisor’s ‘Heroic’ Efforts at Credible DCF
In joint fairness/statutory appraisal action, Chancery finds defendants’ fraud defeated financial advisor’s ability to produce reliable DCF, notwithstanding advisor’s “heroic” efforts to create “the most credible and reliable projections in the case.”
Bruno v. Bozzuto’s, Inc.
Court excludes plaintiffs’ DCF-based damages calculation, finding it suffers from “garbage-in, garbage-out” problem; plaintiffs’ experts based cash flow analysis on defendant’s preliminary projections rather than subsequently available actual sales data.