“What you don’t know will kill you” when it comes to investing in distressed companies, according to Joyce Johnson-Miller, senior managing director at The Relativity Fund, based in New York City. “All your modeling and all your forecasting analyses form a very, very, very small part of investing in distressed companies…. I learned that the hard way.”

Speaking as a panelist at the 2007 Wharton Restructuring Conference in Philadelphia, Miller said that turning around a distressed company starts with a solid understanding of its business environment. The “level of unknown [and] dated information” is among the most important things to keep in mind in approaching troubled assets, she added.…