Shoe Shine has proposed a reorganization plan based on a going-concern value of $1.3 million after court costs and delinquent wages and taxes. The proposed financial structure is $400,000 in new mortgage debt, $200,000 in subordinated debt, and $700,000 in new equity. Secured creditors currently have a mortgage lien for $600,000 and the unsecured creditors are owed $950,000. What should the unsecured creditors receive if the reorganization plan is approved? Multiple Choice 82.6 percent of the subordinated debt and 82.6 percent of new equity $950,000 in new equity securities 61.3 percent of the new mortgage debt, 61.3 percent of the subordinated debt, and 61.3 percent of new equity $700,000 in equity securities $200,000 in subordinated debt and $700,000 in equity securities
Shoe Shine has proposed a reorganization plan based on a going-concern value of $1.3 million after court costs and delinquent wages and taxes. The proposed financial structure is $400,000 in new mortgage debt, $200,000 in subordinated debt, and $700,000 in new equity. Secured creditors currently have a mortgage lien for $600,000 and the unsecured creditors are owed $950,000. What should the unsecured creditors receive if the reorganization plan is approved?
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82.6 percent of the subordinated debt and 82.6 percent of new equity
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$950,000 in new equity securities
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61.3 percent of the new mortgage debt, 61.3 percent of the subordinated debt, and 61.3 percent of new equity
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$700,000 in equity securities
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$200,000 in subordinated debt and $700,000 in equity securities
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