Altman Edward - Corporate Financial Distress, Restructuring, and Bankruptcy

1. Chapter 1
2. Chapter 2
3. Chapter 3
4. Chapter 6
5. Chapter 9
6. Chapter 10
7. Chapter 11
8. Chapter 12
9. Chapter 13
10. Chapter 14
11. Chapter 15
12. Chapter 16

The Wiley Finance series contains books written specifically for finance and investment professionals as well as sophisticated individual investors and their financial advisors. Book topics range from portfolio management to ecommerce, risk management, financial engineering, valuation and financial instrument analysis, as well as much more. For a list of available titles, visit our Web site at www.WileyFinance.com.

Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed to developing and marketing print and electronic products and services for our customers' professional and personal knowledge and understanding.

Fourth Edition

EDWARD I. ALTMAN

EDITH HOTCHKISS

WEI WANG

Copyright 2019 by Edward I. Altman, Edith Hotchkiss, and Wei Wang. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate percopy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 7508400, fax (978) 6468600, or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 7486011, fax (201) 7486008, or online at www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 7622974, outside the United States at (317) 5723993, or fax (317) 5724002.

Wiley publishes in a variety of print and electronic formats and by printondemand. Some material included with standard print versions of this book may not be included in ebooks or in printondemand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

Library of Congress CataloginginPublication Data is available.

ISBN 9781119481805 (Hardcover)

ISBN 9781119481812 (ePDF)

ISBN 9781119481850 (ePub)

Cover Design: Wiley

Cover Image: Ps Pong / Shutterstock

Ed Altman dedicates this book to his wife and partner for over 50 years, Dr. Elaine Altman, whose support and advice have sustained him and helped in crafting these four editions over 35 years.

Edie Hotchkiss dedicates this book to her husband Steven and daughter Jenny for their constant support.

Wei Wang dedicates this book to his wife Ella and children Andrea, Mia, Julia, and Ethan for their endless love and inspiration.

Edward Altman is the Max L. Heine Professor of Finance Emeritus at New York University, Stern School of Business, and Director of the Credit and Fixed Income Research Program at the NYU Salomon Center.

Dr. Altman has an international reputation as an expert on corporate bankruptcy, highyield bonds, distressed debt, and credit risk analysis. He is the creator of the worldfamous Altman ZScore models for bankruptcy prediction of firms globally. He was named Laureate 1984 by the Hautes tudes Commerciales Foundation in Paris for his accumulated works on corporate distress prediction models and procedures for firm financial rehabilitation and awarded the Graham & Dodd Scroll for 1985 by the Financial Analysts Federation for his work on Default Rates and High Yield Corporate Debt. He was a Founding Executive Editor of the Journal of Banking & Finance and serves on the editorial boards of several other scholarly finance journals.

Professor Altman was inducted into the Fixed Income Analysts Society Hall of Fame in 2001 and elected President of the Financial Management Association (2003) and a Fellow of the FMA in 2004, and was among the inaugural inductees into the Turnaround Management Association's Hall of Fame in 2008.

In 2005, Dr. Altman was named one of the 100 Most Influential People in Finance by Treasury & Risk Management magazine and is frequently quoted in the popular press and on network TV.

Dr. Altman has been an advisor to many financial institutions including Merrill Lynch, Salomon Brothers, Citigroup, Concordia Advisors, Investcorp, Paulson & Co., S&P Global Market Intelligence and the RiskMetrics Group (MSCI, Inc.). He is currently (2018) Advisor to Golub Capital, Classis Capital (Italy), Wiserfunding in London, Clearing Bid, Inc., SCube Capital (Singapore), ESG Portfolio Management (Frankfurt) and AlphaFixe (Montreal). He serves on the Board of Franklin Mutual Series and Alternative Investments Funds. He is also Chairman of the Academic Advisory Council of the Turnaround Management Association. Dr. Altman was a Founding Trustee of the Museum of American Finance and was Chairman of the Board of the International Schools Orchestras of New York.

Edith S. Hotchkiss is a Professor of Finance at the Carroll School of Management at Boston College, where she teaches courses in corporate finance, valuation, and restructuring. She received her AB in engineering and economics summa cum laude from Dartmouth College and her PhD in finance from NYU's Stern School of Business. Prior to entering academics, she worked in consulting and for the Financial Institutions Group of Standard & Poor's Corporation.

Professor Hotchkiss's research covers topics including: corporate financial distress and restructuring; the efficiency of cases.

Wei Wang is an Associate Professor and RBC Fellow of Finance and Director of Master of FinanceBeijing program at the Smith School of Business at Queen's University, Canada. His research interests are in bankruptcy restructuring, distressed investing, and corporate governance. His work has been published in leading academic journals including the