Lithium Argentina AG — financial distress indicators
Financial-health summary
Lithium Argentina AG's reported numbers place it in the 'Watch' financial-health band (distress score 45/100). The main indicators are operating profit does not cover interest, severe working-capital shortfall and operations consume cash. Independently, the Ohlson accounting model puts its 1-year failure probability at 37% and the market-implied (Merton) default probability is 0.1%.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Interest coverage (EBIT / interest) is -1.34×.
When EBIT < interest, debt service is funded from cash reserves or new borrowing — the classic precursor to payment default and covenant breach.
Current ratio is 0.52 (current assets cover 52% of near-term obligations).
Cash-flow insolvency test: inability to pay debts as they fall due is the trigger for both U.S. involuntary petitions and Indian IBC default.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
Recurring net losses.
Repeated losses are a core input in both Ohlson and Altman failure models.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- No material mitigating factors found in the available data.
📰 Recent news scan
- Lithium Argentina to Release Third Quarter 2026 Results on November 10, 2026Yahoo Finance · 2026-10-08
- Alaska Energy Metals Appoints Independent Director, Thomas BensonYahoo Finance · 2026-10-02
- Lithium Argentina Announces Cauchari-Olaroz Stage 2 Scoping Study Results and Acceleration of Initial Phase of 10,000 tpaYahoo Finance · 2026-09-30
- Lithium Argentina Announces Closing of $180M Strategic Investment from GanfengYahoo Finance · 2026-09-15
- Lithium Argentina, Ganfeng sign agreements to finalise PPG JVYahoo Finance · 2026-08-25
- Lithium Argentina Reports Second Quarter 2026 ResultsYahoo Finance · 2026-08-11
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Lithium Argentina AG's financial-health indicators show?
As of 2026-10-08, Lithium Argentina AG's public financial data places it in the 'Watch' band with a distress score of 45/100, driven by operating profit does not cover interest, severe working-capital shortfall and operations consume cash. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Lithium Argentina AG's financial distress score?
45/100 ('Watch'). Ohlson O-score -0.52 (model 1-year failure probability 37%). Merton distance-to-default 3.13 σ (model default probability 0.1%).
What works in Lithium Argentina AG's favour?
No material mitigating factors were found in the available data.
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.