Private Company Restructuring

Abstract

Venture capital (VC) firms are increasingly facing issues related to restructuring their private portfolio companies, especially in the current economic environment. With the restructuring of private companies comes a diverse set of issues-both similar to and different from issues arising in public company restructurings-that need to be addressed. In particular, VC firms face issues pertaining to valuation, intellectual property rights (IPR), and executory contracts. The common thread through all of these issues is conflicts of interest that arise within the Board and between investors when a private company faces financial distress. This article addresses these issues as well as common methods to appropriately respond to some of these challenges.