Insolvency belongs to the credit work, which teaches the priority ladder, the covenant that triggers the default and the recovery arithmetic that decides who gets what. The equity question is narrower and can be stated in one paragraph.
In a reorganisation, the estate has a value and the claims against it have a priority. Somewhere in that stack sits the claim that is partly paid: the classes above it recover in full, the classes below it recover nothing, and this one absorbs the difference. That claim is the fulcrum security, and because reorganisation plans typically convert impaired debt into the new equity, its holders become the owners of the reorganised company. The special-situations opportunity is not to buy the old equity, which is almost always worth zero and reliably attracts retail buyers who mistake a low price for a cheap one. It is to identify the fulcrum in advance and to buy it as a claim, understanding that you are buying equity that has not been issued yet.
Two disciplines make that possible and both come from the credit side. You have to be able to value the reorganised enterprise, because the fulcrum's recovery is a function of that value and nothing else. And you have to be able to rank the claims correctly, including the ones that are not obvious: administrative and process costs, financing raised during the process, dues that statute promotes above contract, and any claim whose security interest is contested.
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How does the fulcrum security work in India?
India's insolvency route runs through the Insolvency and Bankruptcy Code, 2016, and it differs from the American reorganisation in ways that change the equity analysis rather than merely the vocabulary. Control passes to a resolution professional and a committee of creditors on admission; the process runs against a statutory clock; resolution plans are submitted by outside applicants and voted by the committee; and the distribution ladder is set by statute rather than negotiated class by class. The practical consequence for anyone looking at the listed equity of a company in the process is that the equity is very rarely part of the resolution, because a resolution applicant typically acquires the company through a plan that extinguishes or heavily dilutes existing shares.
So the honest Indian version of the fulcrum trade is usually not available to a public-market investor at all. The claim you would want to own is a bank loan, and the market for those trades between asset reconstruction companies and lenders, not on an exchange. Where a listed opportunity does appear, it is normally in the acquirer: a listed company whose resolution plan, if approved, adds an asset at a fraction of replacement cost. That is a different analysis with a different risk, and it is worth being explicit that the classic distressed-debt trade taught in American textbooks has a thin Indian analogue in public markets.