I'm trying to understand how to find the fulcrum security for a distressed company and unsure where it is. I'm doing this for a PE distressed debt fund that wants to take ownership of the firm after bankruptcy.
I understand the more senior debt holders get paid in full and the next tranche after that would get equity but what is considered a asset that is given to senior debt holders? I thought maybe it was all the assets of the firms but then the equity would be meaningless because the company would not be a going concern. If the company is a going to remain in operation what do the senior debt holders actually get that wouldn't destroy the firm?
or am I taking the complete wrong approach to figure out the fulcrum security?
btw, been lurking here for months and this is my first post so be nice and sorry if I put this in the wrong section/tag or anything.