The first response might be they're the same as each liability zeroes out the assets held. Simply put the simple math is $0. Is it? Really.
Au contraire. Those holding the notes are less likely to accelerate payment on $100 million as this is a big chunk of change to have to write down. They may be more conducive for restructuring. They might wish to swap equity for debt.
There is often confusion between value ("worth") and price (what's asked). Further, when reported as a single number, the value is more so central tendency versus shown as along a continuum. The spread between "ask" and "bid" for common lesser assets tends to be in a narrower range. Think cookie-cutter starter homes versus McMansions. Since, value may be more intrinsic for larger assets like a portfolio of real property, risk and opportunity assumptions may differ sufficiently that there is adequate variance for "up-side" potential.
Then there is another fundamental issue. What is the work versus wealth income in the two scenarios? The latter deals with income that is primarily generated passively. The former is the income capacity of the party in debt.
Finally, what are the nature and the value of relationships of the party with $100 million in assets? Can they access personal guarantees? Can they convert some assets to more liquid capital with the help of others?
Sure, the fall is steeper for the $100 million, but it may be more gradual when options abound. It is this simple example of the optics of risk and opportunity and through whose lens examination must be made. What's your view? : )
Thanks for allowing me to share. Carl
Posted on January 3, 2016 by Carl Sheeler.