A Practical Career and Implementation Guide to Special Situations, Restructuring and Recovery
Julian R. Sterling
These are the workbooks and documents that go with the book. Chapter 11 sets out what a
recovery model must do: drive everything off a small number of visible assumptions, and build the
waterfall so that changing enterprise value re-identifies the fulcrum by itself rather than by hand.
The four original workbooks are built to that specification and reproduce every recovery the book
prints. Around them: three of the models with the inputs emptied, four printable working documents,
a question book that marks itself, and three cases the book names and never takes to a number.
Free to download. No sign-up, no email address, nothing to fill in.
Eleven workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 22 September 2026.
The four workbooks
These carry the book’s own figures, so that every recovery it prints can be traced to a live
formula.
Download these four89 KB
Chapters 5, 6 and 11
The fulcrum finder
A capital structure, an enterprise value, and a waterfall that names the fulcrum by
arithmetic. The Chapter 6 manufacturer at $600M — DIP and admin at par, first lien at
par, senior unsecured at 60 cents, subordinated at zero — and both flexes that chapter
runs: at $750M the unsecured recover par and the break drops into the subordinated notes; at
$450M the first lien takes everything and the unsecured go to zero. A ladder across seven
enterprise values shows the break migrating in a single view. The Appendix B structure is
worked alongside its market prices, including the two flexes to 450 and 780.
Fulcrum_Finder.xlsx · XLSX · 19 KB
Chapters 4 and 11, Appendix E
Recovery, frictions and return
The transparent model of Chapter 11: enterprise value of 700, fee leakage of 40, a DIP of
100, and the fulcrum moving out of the unsecured notes and into the second lien as a
consequence — which, as the chapter says, is the difference between the security you want
to own and a zero. Then what an 80-cent headline is worth when it arrives as 30 cents of cash
and 50 of face in takeback notes trading at 90: 75 cents, and a 22% annualised return over two
years that falls under 10% if the process runs five. The one-turn-of-multiple sensitivity, where
the senior claims do not move at all and the fulcrum swings from zero to 67 cents. And both
worked examples of Chapter 4, each ending with the break-even recovery and the cushion.
Recovery_and_Return.xlsx · XLSX · 20 KB
Chapters 8 and 14, Appendix A
Valuation, the liquidation floor and diligence
The mid-market industrial company valued segment by segment — a fair multiple on
normalised earnings for the healthy segment, trough earnings and a trough multiple for the weak
one — reaching $535M with a range around it. The liquidation floor built independently at
$330M. Then both tranches set against both scenarios on one page: the first lien covered on both
grounds, the notes recovering 27 cents in the going concern and nothing at all in liquidation.
The 27-question diligence checklist of Appendix A is attached as a working document that will
not report itself ready while an answered question has nothing written against it.
Appendix B prints a capital structure, three market prices and three enterprise values,
and concludes that these are “three very different bets”. It never prices one of
them — it computes recoveries and never divides one by the price two lines above.
Appendix E supplies the missing arithmetic on a different structure. This workbook joins
them. It finds that at the book’s own downside of 450 the fulcrum loses 30.6
per cent while the first lien makes 8.7; that the three prices imply three different
enterprise values — 322, 494 and 668, a spread worth 43 per cent of the claims
outstanding; that the best trade changes hands at exactly 506.5 and 687.5; and that a
priming DIP of 80 with 40 of fees turns the fulcrum’s 74 per cent gain into a 10 per
cent loss on the same enterprise value. 121 controls, all live.
Which_Tranche_To_Buy.xlsx · XLSX · 22 KB
The same models, on your own situation
The fulcrum finder, the recovery model and the valuation, with the same formulas, every input emptied
and the book’s worked examples taken out. Type your own capital structure into the blue cells.
Blank set · three workbooks
Your capital structure, your case
The waterfall and its ladder of enterprise values; the frictions, the form of the recovery and the
timeline; the sum of the parts and the liquidation floor, set against both tranches. Each workbook
closes on a checks sheet that counts the inputs still empty and runs the tests that hold on any
capital structure: nothing distributed beyond the value available, recoveries that never rise down
the ladder, at most one fulcrum, a recovery package that adds up, a point estimate inside its own
range, a liquidation floor below the going concern.
Put the book’s inputs back, listed in the read-me, and the book’s recoveries come back
with them: 60 cents on the Chapter 6 notes, 80 on the Chapter 11 second lien, 535 and 330 in
Chapter 8.
Five pages to print and take into a meeting. A4, with margins wide enough for US Letter.
Chapters 5, 8, 9, 11 and 12 · Appendix A
Four working documents
The capital-structure map Chapter 5 asks you to build: every tranche, the entity that issued it,
what it can reach, who guarantees it and what it trades at, with the structural questions beneath.
The recovery underwriting sheet: the range, the frictions, the fulcrum in each case, the form of the
recovery, the timeline and the break-evens in value and in months. The twenty-seven questions of
Appendix A with a status, an owner and a line for the answer. And a documents-and-vote sheet: what a
majority can change, what the baskets let move, and the stake it takes to block.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Thirty numerical, ten multiple choice
The numerical questions work the book’s own capital structures: the Chapter 6 waterfall and
its flexes, Appendix B and the prices Appendix F puts on it, the Chapter 8 sum of the parts and
liquidation floor, the Chapter 11 frictions, and the returns of Chapter 4 and Appendix E. They are
marked against a tolerance, so a reasonable rounding passes. The score sheet counts the wrong
answers by part of the book, which gives the only revision list worth having.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for
each answer.
New material, not a restatement. Three situations the chapters name in passing and never take to
a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a
checks sheet closes it. Type your own figures in and every finding recomputes.
Case one · extends Chapters 4 and 11
The case that runs long
The Chapter 11 structure, with fees accruing by the month and the DIP accruing interest ahead of
everyone. The second lien, bought at 50, recovers 81.7 cents if the case lasts a year and 23.5 if it
lasts four. Its return goes from 53 per cent a year to a loss of 19; with only the calendar running,
it would still have earned 8. The position stops making money at about thirty months. Time costs the
fulcrum twice: once in the denominator of the return, once in the numerator.
Case two · extends the priming uptier of Chapter 9
The wrong side of the vote
A group holding 52 per cent of a term loan rolls into a super-senior tranche at 95 and lends new
money alongside. At an enterprise value of 400 the majority is worth 95 per 100 of old loan and the
minority 63.75, against 80 each had nothing happened: 31 points apart on the same claim. The
minority is impaired below 487, the majority only below 247. The trade in one line: 5 points given
up in the good case, immunity in every bad one, paid for by the lenders who were not in the room.
Case three · extends structural subordination in Chapter 5
Senior on the cover
“Senior” notes at a holding company, bought at 30. With no guarantee from the operating
company they recover 20 cents at an enterprise value of 500 and break even at 525; with an upstream
guarantee they recover 42.9 and break even at 455. The guarantee is worth 70 of enterprise value,
and every cent of it is paid by the trade creditors who share the pool.
Chapter 11 is unusually specific about model construction: "build the waterfall so that
changing EV automatically re-identifies the fulcrum; the tranche where value breaks should fall
out of the arithmetic, not be hard-coded by hand, because the whole point is to watch it migrate
as assumptions change."
That is what the status column does. Type one number into one cell and the label moves. At
$450M the first lien is the boundary; at $600M the senior unsecured notes are the fulcrum at 60
cents; at $750M the break has dropped to the subordinated notes that a moment earlier were worth
nothing.
A position sized on a fulcrum thesis is a position sized on one number. The sheet exists to
make you look at how far that number can move before the thesis stops being true.
Reader list
Optional. One email when a companion file is corrected or a new worked case goes up, and a short note when a new book comes out. Nothing on this page needs it.
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. They use
no macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks
to update links on opening, decline — there are none.
What changed, and when
22 Sep 2026
Blank model set, four printable working documents, the question book
and three new cases added. In three workbooks the verdict cells, which read “TOUT
CONCORDE” and “ECART”, now read ALL AGREE and GAP; no figure changed.
Read-me rewritten.
Articles on this book
Two of the calculations in these workbooks, worked out in full.
All articles.
What an 80-cent recovery is actually worthPaid as 30 cents of cash and 50 of face in takeback notes at 90, it is worth 75 cents. And the return turns on a date nobody sets.
Also by Julian R. Sterling
The other books with companion files. The full list of titles is on the
author page.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
The CBAM Compliance HandbookWhat 2027 really costs, how big the buffer should be, and the term the surrender formula counts twice.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Real Estate Debt InvestorThe margin against the return on capital, the floor priced, and what prepayment protection buys.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
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