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Liquidation Waterfall Calculator

Distressed liquidation distributes by priority. This calculator runs the stack.

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LP recovery

$900,000

Mezz recovery

$3,200,000

LP recovery %

15.00%

How the math works

Sequential deduction: gross − selling − senior − mezz = LP recovery pool.

Stress-test the stack at 80% and 70% of gross proceeds when underwriting. Senior debt is usually safe; mezz flips from 'likely full recovery' to 'at risk' at roughly 85% of gross. Know where your tier sits on the curve before capital commits, not after.

How to Use

  1. Enter gross sale proceeds.
  2. Enter selling and legal costs.
  3. Enter senior debt balance.
  4. Enter mezz debt balance.
  5. Enter LP equity.
  6. Read tier-by-tier recovery.

Frequently Asked Questions

Priority order?

1) Selling/legal/broker costs. 2) Senior debt. 3) Mezz debt. 4) LP equity (return of capital). 5) LP pref. 6) Sponsor catch-up. 7) Residual split. In distress, often doesn't reach LP pref.

Recovery rates?

Senior debt: 85-100% in typical distress. Mezz: 30-80% (can be wiped out). LP equity: 0-50%. Sponsor carry: usually zero. Distressed sales systematically compress lower tiers — structure matters more than cap rate.

Timing friction?

Legal + broker: 4-8% of gross. Receiver: add 1-3%. Protracted workout: 10-20 month carry. Total friction: 15-25% of gross proceeds. Each percentage point of friction shifts recovery down a tier.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.

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