Subject The article addresses the methodological framework for corporate solvency projections. The projections are extremely important for bankruptcy procedures. If it is possible to recover the debtor's solvency, turnaround management program is advisable. Otherwise, to continue business is meaningless, and it is required to sell the existing assets, repay debts to the extent possible, and liquidate the legal entity. Objectives The purpose of the study is to substantiate recommendations for assessing the possibility to recover the solvency of a company after started bankruptcy proceedings, to offer an alternative dynamic model, and to test it. Methods The idea of the proposed approach is to predict the solvency using the direct method, which summarizes information on cash flows from operating, investing and financing activities of the company. Results We provide a rationale forthe dynamic model of solvency assessment under the discounted cash flow method. We assume that the forecast period generally corresponds to the period of recovery procedures and payments to creditors, cash flows rest on the debtor's financial condition specifics, and the discount rate is set on a cumulative basis. We test the proposed model on the case of a company, against which bankruptcy proceedings have been initiated. Conclusions and Relevance The forecast accuracy largely depends on the quality of planning the anti-recessionary actions, and expert assessment of specific risks. Thus, the solvency assessment model should be tailored to financial insolvency conditions, and requires further empirical research.
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