Companies are already doing this with “EBITDAC”, appending “...Corona.” Using estimated earnings/sales, or simply substituting Q3/Q4 last year for this years Q

Companies are already doing this with “EBITDAC”, appending “...Corona.” Using estimated earnings/sales, or simply substituting Q3/Q4 last year for this years Q1/Q2 earnings. The cited motivation that Ive seen has been between counterparties and covenants around debt. Companies need lending to survive. But the immediate business performance would cause an immediate breach of covenants or terms, forcing actions like margin calls or liquidation. That would leave both lender and company worse off. So instead they agree to substitute in some plausible values with the expectation that business will return to “normal” sooner or later, inside the lifetime of said contract. I havent seen anyone actually posit that revenue/earnings/profit are actually going to fully return immediately, nor that theyll capture that “deferred” business. As always matt levine had a good take on this last week.