Leveraging Valuation for Bankruptcy Purposes

The Challenge

Alestis Aerospace (AA), a Spanish manufacturer of critical components for major aircraft makers including Airbus and Boeing, was facing a cash crunch because of Spain’s banking crisis, which led the company to be voluntarily placed under court administration (the Spanish equivalent of U.S. bankruptcy protection).

Ernst & Young (EY) is the administrator in the bankruptcy proceedings relating to AA. Under Spain’s local regulations (Insolvency/Bankruptcy Act, the administrator is required to prepare a memorandum on the subject company, along with an inventory and valuation of all tangible fixed assets. According to the regulations, if necessary, the administrator may appoint an independent expert to perform these tasks.

The Solution

VRG in Spain had previously provided support to EY in engagements of this nature, including exhaustive inventories of shipyard equipment and fixtures.

For this engagement, EY appointed VRG to prepare a report which included valuations of nine manufacturing and assembly plants in Spain. The valuation process encompassed the following:

  • A detailed M&E inventory
  • Value-in-use of AA’s tangible assets
  • An orderly liquidation value of AA’s tangible assets
  • Floor-to-book and book-to-floor reconciliation of physical assets