FIN.22:4.5 - Compare total preservation and each participant’s position

First compare route-level net value on consistent boundaries, dates and risk grounds. Then compare each material claimant’s recovery against the relevant feasible alternative. A route that preserves more total value can still make a senior creditor worse off by delaying a payment while benefiting junior creditors or owners. That distribution matters to consent and negotiation; aggregate superiority cannot substitute for it.

Use a common valuation date and currency while allowing different justified discount or risk treatment for different claims. A shared date does not require one convenient rate for every recovery. Distinguish expected loss in the projected payment from the price of bearing its remaining risk, using FIN.5 to avoid double counting. If claims have different support, do not discount them all at the distressed corporation’s historical WACC.

Test the assumptions that can reverse the preference: sale proceeds, operating improvement, time to agreement, interim-finance price, process cost and priority. Identify the threshold or condition whose resolution would change the route. A modest apparent gain that disappears with a short delay or ordinary cost overrun supports a conditional recommendation and timely contingency, not an assertion that restructuring is certainly better.

Assess proposed transfers or concessions as changes to the route. An interest uplift, priority change or equity participation can compensate a participant only to the extent that the resulting payments or rights have value and the treatment can be agreed or imposed under the applicable procedure. Recalculate every affected recovery after the change. Do not promise the same remaining value to two creditor groups.