From underwriting assumptions to downside outcomes
Each case starts with the same questions a lender would ask: how much debt the business can support, what protections sit in the documents, and what value may remain if the plan fails. The healthcare case follows a stressed borrower through a recovery waterfall; the SaaS case tests recurring revenue against debt service, liquidity, and covenant headroom.
Healthcare Rescue Financing, Recovery Value & Capital Structure
This case follows an Indian healthcare borrower through a nine-month liquidity gap. The analysis tests whether a INR 1,000 Cr second-lien facility can be supported by enterprise value after working-capital claims, liquidity needs, and subordinated debt are accounted for.
The memo supplies the capital stack and operating assumptions; this page applies them to three enterprise-value scenarios and allocates recovery by claim priority. That makes the connection between headline yield and actual downside explicit.
Indian Healthcare Borrower
INR 1,000 Cr Second-Lien Rescue Financing & Recovery AnalysisWhy the borrower needs rescue capital
Root Operational Causes
- 1. Fixed Debt Service Burden INR 1,665 Cr of funded debt created a heavy interest burden against a much smaller operating profit base.
- 2. Tier-1 Contract Loss Loss of a major customer contract weakened revenue visibility and compressed operating margins.
- 3. Cross-Default Acceleration Covenant pressure restricted flexibility and forced lenders to reassess liquidity, priority, and recovery outcomes.
Pre-Restructuring Capital Structure
Petition Date| Tranche | Par Claim | Coupon | Status | Trading Range |
|---|---|---|---|---|
| Working Capital Facility | INR 290 Cr | Repo-linked + 375 bps | Fully Covered | 97.5 paise |
| Second-Lien Secured Notes | INR 1,000 Cr | Repo-linked + 625 bps | Fulcrum Tranche | 54 paise - 62 paise |
| Subordinated Debt | INR 375 Cr | 10.75% Fixed | Impaired / OTM | 12.5 paise |
| Sponsor Common Equity | - | - | Extinguished | 0.0 paise |
| Total Funded Claim | INR 1,665 Cr | 14.5% Second-Lien Yield | LTV Cushion: 52.0% | Illustrative |
Interactive Debt Recovery Waterfall Engine
| Claim Tranche | Par Amount | Allocated Value | Recovery Rate | Consideration | Analyzed Stake Realized |
|---|---|---|---|---|---|
| Working Capital Facility (1st Priority) | INR 290 Cr | INR 290 Cr | 100.0% | 100% Cash Refinance | - |
| Second-Lien Secured Notes (Fulcrum) | INR 1,000 Cr | INR 700 Cr | 70.0% | Take-back debt and restructured equity | INR 700 Cr (70.0%) |
| Subordinated Debt | INR 375 Cr | INR 0.0 Cr | 0.0% | 8.0% Common Equity Dilution Warrants | INR 0.00 |
| Pre-Petition Sponsor Equity | - | INR 0.0 Cr | Extinguished | Full Cancellation without Value | - |
Restructuring Mechanics & Thesis Milestones
Secondary Accumulation
Creditor group accumulated 34.2% of term-loan claims across secondary markets at 58.0 paise on the rupee, building a blocking position for negotiations under an Indian restructuring process.
Restructuring Support
Formation of an ad hoc creditor coalition representing 78% of claims, negotiating a consensual restructuring plan around lender protections, timelines, and milestones.
Interim Funding & Resolution
Interim senior funding supports operations while the borrower works through a resolution plan, closes loss-making capacity, and protects enterprise value.
Equitization & Realization
Part of the debt is converted into equity as operations are repositioned, with recovery tested through a strategic sale and downside-case waterfall.
INR 700 Cr First-Lien Facility for an Indian Enterprise Software Business
This companion case applies the memo’s recurring-revenue underwriting framework to debt capacity, covenant design, and downside protection. It is a credit analysis, not a claimed transaction.
Underwriting Questions
- Revenue quality: Is ARR diversified, contracted, and supported by healthy retention?
- Debt capacity: Can the business move from ARR-based protection to EBITDA leverage?
- Downside: How much recurring revenue can be lost before coverage and liquidity weaken?
Protection Framework
- Negative pledge against incremental junior debt.
- INR 65 Cr minimum cash balance test.
- First-priority security over software IP and source code.
- 50% excess-cash-flow sweep to accelerate deleveraging.