A firm has a value of $36 million if it is not liquidated and a value of $28 million if it is liquidated. The firm has $24 million in senior debt outstanding and $20 million in junior debt outstanding. The firm proposes the following restructuring: Senior debt holders exchange their debt for 70% of the firms equity Junior debt holders exchange their debt for 10% of the firms equity Equity holders keep 20% of the reorganized firms equity

Which of the following security holders prefer this reorganization plan to what they would get in liquidation assuming that the Absolute Priority Rule (APR) would be followed in liquidation? (a) Equity holders (b) Senior debt holders (c) Junior debt holders