How do you negotiate valuation in a restructuring where equity value is often zero?

Negotiation dynamics in restructuring:

• 'Equity-stub value' — even when a DCF shows equity = 0, equity often has option value (a real option on recovery). Sponsors try to push a stub value of $5–15m.
• 'Strategic value' — existing customer relationships, brand, and employee know-how can carry non-quantifiable value. Buyer argument: 'we'd pay X for the carve-out platform alone'.
• 'Cost of liquidation avoidance' — reorganization-plan costs, reputational damage, and employee severance/social-plan costs can lower the liquidation floor by 20–40% — this 'avoidance value' can be allocated to equity holders.
• Game theory: bondholders vs. shareholders — bondholders have an incentive to compute equity value as zero; shareholders the opposite.
• Plan-negotiation leverage: the debtor's ability to file the reorganization plan is a strong lever (cram-down only with a majority's consent).