Author: Alessandro Radice · M.Sc. Economics and Business Law (Finance), Università Cattolica del Sacro Cuore, Milan
Wolfspeed cut $4.7 billion of debt in a 91-day prepackaged Chapter 11. Who recovered what, and did the plan follow absolute priority?
This is a restructuring case study on the largest US silicon carbide chipmaker. It covers the case from the petition on 30 June 2025 to emergence on 29 September 2025. The analysis rebuilds:
- the claims and capital structure;
- a Chapter 7 liquidation analysis;
- the plan's enterprise value and distributable value;
- an absolute-priority waterfall;
- the recovery each class actually received;
- an illustrative 13-week cash flow.
The project includes a Colab notebook, an Excel model with live formulas and an EV case switch, a memo and a presentation deck.
In a restructuring, value is split by priority. Secured creditors are paid first. Next comes the "fulcrum" class, where value runs out and which takes the new equity. Below it, everyone else is usually wiped out. Wolfspeed is a clean real-world test of that rule. Its $6.7 billion of funded debt includes secured notes, three series of convertibles and a $2.1 billion claim from Renesas, its largest customer-lender. The case ran on a court-approved valuation and fresh-start accounting.
The project has three goals:
- Rebuild the case end to end. Cover the claims by class, the liquidation floor, the plan valuation and the waterfall.
- Test the plan against the rules. Check the best-interests test (plan vs liquidation) and absolute priority (plan vs waterfall).
- Deliver it in adviser format. Build an auditable Excel model reconciled with the Python engine, plus a memo and a deck.
| Low | Mid | High | |
|---|---|---|---|
| Plan enterprise value | $2.35bn | $2.60bn | $2.85bn |
| Distributable value (EV + excess cash) | $2.84bn | $3.09bn | $3.34bn |
| Senior secured notes recovery | 100% | 100% | 100% |
| Unsecured pool recovery (strict absolute priority) | 23.7% | 28.2% | 32.7% |
| Classes 4 + 5 if trade claims are paid in full first | 19.3% | 24.0% | 28.8% |
| Class | Fresh-start value | Market ($25.59) | Liquidation | Disclosure statement |
|---|---|---|---|---|
| 3 · Senior secured notes | 108.5% | 100.6% (at face) | 100% | 86% |
| 4 · Convertible notes | 25.0% | 39.1% | 4.1–21.2% | 25–30% |
| 5 · Renesas | 22.0% | 41.8% | 4.1–21.2% | 27–29% |
| 6 · General unsecured | 100% | 100% | 4.1–21.2% | 100% |
| Old equity (156.5m shares) | $28m | $56m | 0 | 3–5% of equity |
- Capital structure. Funded debt falls from $6.75bn to $2.06bn of new notes, a 69% cut. Cash interest is about $240m a year lower (disclosure statement).
- Absolute priority. At fresh-start value, the convertibles and Renesas received $1,243m. The waterfall gives them $1,256m, about 1% more. The convertible holders' extra share (62% vs 59% pro rata) likely reflects the $275m of new money they provided. The departures from strict priority are the senior notes above par at fair value, trade claims paid in full and 5% to old equity.
- Best interests. Both unsecured classes do better than in the liquidation high case.
- Old equity recovers only above an EV of about $6.6bn. Its 5% stake was a negotiated distribution from the unsecured creditors, not an entitlement.
| Step | Module | What it produces |
|---|---|---|
| 1 | Data | Claims by class, 29 June 2025 balance sheet, plan consideration, fresh-start valuation, market data |
| 2 | Capital structure | Funded debt before and after, debt eliminated |
| 3 | Liquidation analysis | Chapter 7 proceeds, costs and recoveries by class, low and high case |
| 4 | Valuation | Plan EV range, bridge to distributable value, EV/sales cross-check |
| 5 | Waterfall | Absolute-priority recoveries, the fulcrum class, the EV where old equity is back in the money |
| 6 | Plan recoveries | Value received by class at fresh-start value and at the market share price |
| 7 | Sensitivity | Recoveries by enterprise value and by share price |
| 8 | 13-week cash flow | Illustrative weekly liquidity from petition to emergence, reconciled to reported cash |
| 9 | Exports | Excel model with live formulas and a chart |
Cover · Inputs · Claims · Liquidation · Valuation · Waterfall · Plan Recoveries · Sensitivity · 13-Week
- EV case switch: one cell on
Inputs(1 = Low, 2 = Mid, 3 = High) drives the selected column of the valuation and the waterfall. - Colour code: the model uses the standard banker convention. Blue is a hard-coded input, black a formula and green a link to another sheet.
- Checks: the model has 431 formulas, a best-interests test and a 13-week check against reported emergence cash. Every output is reconciled with the Python engine.
- Claims: the disclosure statement estimates, including accrued interest. Trade and other general unsecured claims form Class 6.
- Liquidation:
- Recovery rates are applied to the 29 June 2025 balance sheet.
- Deductions are a 3% trustee fee on non-cash proceeds, wind-down and professional costs, and $75m of administrative and priority claims.
- $250m of extra unsecured claims is added, the kind that arises only in a liquidation.
- Distributable value: plan EV plus cash above the $350m minimum-liquidity covenant. It is measured before the emergence cash flows: the $250m paydown at 109.875% is added back and the $275m of new money is taken out.
- Waterfall: under strict absolute priority, all unsecured claims share pro rata. A second view follows the plan's structure, in which Class 6 is paid in full first.
- Plan recoveries: the value received divided by the allowed claim.
- Fresh-start basis: each instrument at its fair value on emergence, and shares at $13.06.
- Market basis: shares at the current price, and 2L convertibles at the higher of fair value and conversion value. The senior notes are valued at face on this basis.
- The rights offering counts only for its value above the new money paid in.
- Liquidation recovery rates, costs and extra claims are assumptions, not the disclosure statement's own liquidation analysis.
- Claims are estimates, not final allowed amounts. The conversion rate is assumed to be the same for both 2L convertible series.
- The 13-week weekly timing is illustrative. A reconciling line ties it to the reported $835.4m of emergence cash.
- EBITDA is negative, so the trading cross-check relies on EV/sales only.
This project is for educational purposes and is not investment advice.
| Requirement | Details |
|---|---|
| Environment | A Google account to run the notebook in Google Colab; the free tier is enough. It also runs in any local Jupyter with Python 3.10+. |
| Python libraries | pandas, numpy, matplotlib, xlsxwriter. The first cell installs what is missing. |
| To open the outputs | Microsoft Excel or Google Sheets; any PDF reader. |
| Background knowledge | Capital structure and seniority, Chapter 11 basics, enterprise value. |
- Open
Wolfspeed_Restructuring_Analysis.ipynbin Google Colab. - If you want, change the assumptions in the Data cell: liquidation rates, EV range, share price.
- Run
Runtime → Run all. The Excel model and the chart download automatically. - In Excel, set
Inputs!C5to 1, 2 or 3 to switch the EV case, or edit any blue cell.
├── Wolfspeed_Restructuring_Analysis.ipynb # the notebook (run this)
├── wolfspeed_restructuring.py # same code as a plain Python script
├── Wolfspeed_Restructuring_Model.xlsx # Excel model with live formulas and an EV case switch
├── Wolfspeed_Restructuring_Memo.pdf # restructuring memo
├── Wolfspeed_Restructuring_Deck.pdf # seven-slide presentation
├── plan_recoveries.png # slide used in this README
├── recovery_vs_ev.png # chart used in this README
└── README.md
- Wolfspeed, Disclosure statement (Exhibit 99.1), SEC EDGAR (June 2025)
- Wolfspeed, Emergence 8-K, SEC EDGAR (September 2025)
- Wolfspeed, Q4 FY2025 results, SEC EDGAR (August 2025)
- Wolfspeed fresh-start financial statements (424B3) and Q4 FY2026 results (2026)
- Market data: stockanalysis.com, September 2026
Python · pandas · numpy · matplotlib · xlsxwriter · Google Colab · Excel