Having survived earlier travails, Marvelous Computers finds itself in trouble again. It now has three types of debt: a bank loan with the highest priority, senior debt owned by bondholders with the next highest priority, and junior debt owned by bondholders with the lowest priority. The repayment obligations of Marvelous Computers one period hence include the bank loan of $250, senior bonds of $45, and junior bonds of $45. Mr. Doors has announced his intention to declare Marvelous Computers bankrupt. At this stage,

creditors must choose one of two mutually exclusive restructuring plans: plan A under which the value of Marvelous Computers next period will be $290 with probability 0.6 and $125 with probability 0.4, or plan B under which the value of Marvelous Computers next period will be $340 with probability 1/3 and $25 with probability 2/3. If you are the bank’s representative, which plan would you prefer and what sort of coordination problems would you expect? Assume universal risk neutrality and a zero discount rate.