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? 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

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 34P

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Yellaratu Group is reorganizing and has presented a proposal based on agoing-concernivalue of $3 million after reorganization costs anddelinquent wages, benefits, and taxes. The proposed financial structureis $680,000 in new mortgage debt, $320,000 in subordinated debt, and$2.000,000 in new equity. Secured creditors currently have a mortgagelien for $2.5 million on the factory and the unsecured creditors' claimstotal $1.3 million. How much of the new debt and equity securitiesshould the secured creditors receive?O $3.0 millionO $.68 millionO $1.8 millionO $2.5 millionO $3.3 million
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