Immersion Learning

Riding the Bankruptcy Rollercoaster

by Lindsay Hayden McCorkle, MBA ‘15 (5/30/14)
Lindsay Hayden McCorkle, MBA ‘15During a recent class, we were fortunate to have Johnson alumnus, Barry Ridings, MBA ’76, managing director and vice chairman of US Investment Banking, Lazard Frères & Co, speak about the rollercoaster process known as bankruptcy. Having previously heard about distressed assets from Johnson alumni Robert T. Symington, MBA ’92, and investments from David Breazzano, MBA ’80, the presentation was particularly interesting and well-timed. I think we were all waiting to learn more about the role of an investment banker during the bankruptcy process.

Mr. Ridings used the Six Flags bankruptcy to walk us through the challenging, and usually contested, valuation process. He was, above all, frank, entertaining, and honest in his evaluation of both his and other firms’ work during the valuation process. Learning more about the different participants of the process, ranging from creditors to lawyers to employees, was crucial for securing a better understanding of how assets are valued. I was surprised by the drastically different valuations firms produced, especially during the selection of comparable companies. Given the lack of publically traded amusement parks, participating banks were forced to be creative while identifying comparable companies. Complicating the issue further, different stakeholders have different motivations as it pertains to valuation.

It was interesting to hear about some of the other aspects of the bankruptcy process such as the management team of the company and even the importance of the judge and court location. We were able to get a much better perspective of the role lawyers play and how different parties must work together to ensure a fair outcome. In addition, Mr. Ridings was able to share insight about a wide range of topics, from the current culture on Wall Street to emerging competitors. His extensive knowledge of both bankruptcy and investment banking in general, made for an amusing, engaging, and memorable afternoon.