⚠️ Risk Mitigation Strategies for Distressed Unlisted Equity

Summary: Opportunistic investors target companies in distress, but the pitfalls are steep: governance issues, legal entanglements, and opaque finances. Learn InvestoEdge’s five-step framework to de-risk stressed-asset investments.

1. Legal & Financial Forensics

Deep-dive audits of statutory filings, debt covenants, and cash-flow waterfalls to uncover hidden liabilities.¹⁰

2. Governance Scorecard

Assess promoter track records, board independence, and related-party transactions—scored against sector benchmarks.¹¹

3. Rescue Financing Structures

Design debt-equity hybrids with built-in covenants, convertibles, and performance-linked warrants to align interests.

4. Collateral & Pledge Mechanics

Verify perfection of security interests, enforceability in insolvency, and secondary lien rights.¹²

5. Exit Planning & Waterfalls

Model multiple exit cases—M&A, turnaround sales, or asset divestments—with prioritized claims hierarchies.

Why InvestoEdge?

Our stress-asset team combines ex-NCLT lawyers, turnaround experts, and capital-markets pros to execute safe, high-return distressed deals.

References

1. Mondaq – Due Diligence in Distressed Transactions
2. ICAI – Corporate Governance Best Practices
3. INSOL India – Security Interest Enforcement