At a DDC Board meeting called to decide whether to complete the IPO, take the Boeing offer, or sell to Silverpond, the board member representing VC-1 said that she didnt like the idea of exiting via an IPO because (select the most rational)

	A.	It would dilute the VCs ownership stake
	B.	It would force the conversion of the VC CPS into CS which would result in a tax liability
	C.	It would make the board member subject to fiduciary duty obligations
	D.	It would require the board member to disclose personal financial information in the prospectus
	E.	It would take too long to fully monetize the VCs investment

Another board member argued that an LBO would subject DDC to too high a risk of getting in financial distress and having to file for bankruptcy under Chapter 11. In a Chapter 11 bankruptcy it would be most likely that

	A.	The company would file the bankruptcy petition after the violation of a maintenance covenant
	B.	The bank lenders would file the bankruptcy petition after the violation of a maintenance covenant
	C.	The Senior unsecured debt lenders would file the bankruptcy petition after the violation of a maintenance covenant
	D.	The bank lenders would file the bankruptcy petition after the violation of a negative covenant
	E.	The Company would file the bankruptcy petition after the violation of a negative covenant.

The VC-1 partner leading the DDC investment is very excited about the prospect of the exit to Silverpond and starts calculating what will be VC-1s carried interest (VC-1 has standard 2/20 terms subject to 8% hurdle rate) on the transaction. Regardless of any assumptions/information above, assume VC-1 invested $20MM for 40% of DDC four years ago, but due to subsequent rounds in which VC-1 did not participate that VC-1's current ownership percentage is 15%. Silverlake agrees to purchase all 20MM shares of DDC's F.D. common stock for $15/sh.

		5.0
		45.0
		7.7
		25.0
		3.7

Silverpond completes the acquisition and the loan funds. The next day, a jury in a Texas State Court awards a plaintiff in a minor litigation $1,000 in actual damages and $99.999MM in punitive damages against DDC. Bank learns of the judgment and claims DDC is in default under the loan agreement (fairly typical provision) and files a notice of acceleration of the loan. Although DDC's lawyers advice DDC that they should be able to over-turn the ridiculous punitive damage award on appeal, because of the acceleration notice, DDC HoldCo and DDC OpCo hastily file a consolidated petition for Chapter 11 protection (Ch 11). The chart below depicts the DDC organizational structure. The Bank UTL is unconditionally guaranteed on a senior basis by DDC OpCo. The Board, whose members have never gone through a Ch 11 before, ask which pairs of claims are pari-passu with each other. Select all that are not pari-passu.

		Bank UTL v Unpaid Legal Fees
		Pension vs Trade Claims
		Pension v Bank UTL
		Pension v Litigation Claim
		Litigation Claim v Bank UTL
		Unpaid Legal Fees v Litigation Claim

DDC HoldCo ($000) Misc Assets 10,000 Bank UTL (Guar) DDC-OpCo Equity Unpaid Legal Fees Equity 150,000 1,000 Enterprise Value DDC OpCo ($000) Trade Claims 175,000 Pension Litigation Claim Equity 15,000 10,000 100,000 DDC HoldCo ($000) Misc Assets 10,000 Bank UTL (Guar) DDC-OpCo Equity Unpaid Legal Fees Equity 150,000 1,000 Enterprise Value DDC OpCo ($000) Trade Claims 175,000 Pension Litigation Claim Equity 15,000 10,000 100,000