Recovery

Recovery rate is the percentage of a nominal claim actually recovered by a creditor in the event of debtor default or insolvency. It is a key parameter in credit instrument valuation, loan loss provisioning and Distressed M&A target pricing. In due diligence, estimating recovery rates on doubtful receivables determines the required provision level and the normalised working capital reference. In judicial liquidation proceedings, the judicial trustee's recovery rate estimate drives the disposal plan offer calibration.

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Example: in a French judicial liquidation with CHF 5.2 million of total creditor claims, the judicial trustee estimates 95% recovery for secured creditors (CHF 1.71 million on CHF 1.8 million) and 15% for unsecured creditors (CHF 510,000 on CHF 3.4 million) — total estimated proceeds of CHF 2.22 million. This recovery analysis directly guides the disposal plan offer at CHF 1.8 million, covering secured creditors in full.

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Hectelion models recovery rates in Distressed M&A and judicial expert mandates to estimate realistic asset realisation values.