Any appraisal may include damaged, obsolete, customer returns, internal rejects, or aged inventory that typically is deemed ineligible. That same thought pattern sometimes is applied to metals inventories when distressed inventory is excluded on the borrowing base. Unlike other distressed inventories that may have no value, metals typically have a scrap value that, in some cases, may represent more than 50% of cost in certain products. In some cases, including distressed inventory as eligible at scrap value could provide additional liquidity and a more accurate estimate of true recovery values.

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