Firm A, under Chapter 11 bankruptcy proceedings, has an estimated going concern reorganization value of $3.0 million The last pre-bankruptcy balance sheet of the firm is below this shows the "old" capital structure). Assume that there are no other claims from any party LAST PRE-BANKRUPTCY BALANCE SHEET ASSETS Current Assets Fixed Assets TOTAL ASSETS $1,250,000 3,500,000 $4,750,000 LIABILITIES and NET WORTH Senior Debt Subordinated Debt Common Stockholders Equity TOTAL LIABILITIES and NET WORTH 1,000,000 3,000,000 750,000 $4,750,000 Assume that the reorganized "new" capital structure must be 2/3 debt and 1/3 common equity, with $1,500,000 of the new debt subordinated to senior debt. After the fair distribution of the new securities under the reorganization a. the "old" Senior Debt of $1,000,000 in the last pre-bankruptcy balance sheet will after the reorganization end up with "new" Senior Debt of $1,000,000 b. The "old" Common Stockholders Equity of $750,000 in the last pre-bankruptcy balance sheet will after the reorganization end up with "new" Common Stockholders Equity of $750,000 c. The "old" Subordinated Debt of $3,000,000 in the last pre-bankruptcy balance sheet will after the reorganization end up with "new" Subordinated Debt of $1,000,000, and "new" Common Stockholders Equity of $1,000,000 Firm A, under Chapter 11 bankruptcy proceedings, has an estimated going concern reorganization value of $3.0 million The last pre-bankruptcy balance sheet of the firm is below this shows the "old" capital structure). Assume that there are no other claims from any party LAST PRE-BANKRUPTCY BALANCE SHEET ASSETS Current Assets Fixed Assets TOTAL ASSETS $1,250,000 3,500,000 $4,750,000 LIABILITIES and NET WORTH Senior Debt Subordinated Debt Common Stockholders Equity TOTAL LIABILITIES and NET WORTH 1,000,000 3,000,000 750,000 $4,750,000 Assume that the reorganized "new" capital structure must be 2/3 debt and 1/3 common equity, with $1,500,000 of the new debt subordinated to senior debt. After the fair distribution of the new securities under the reorganization a. the "old" Senior Debt of $1,000,000 in the last pre-bankruptcy balance sheet will after the reorganization end up with "new" Senior Debt of $1,000,000 b. The "old" Common Stockholders Equity of $750,000 in the last pre-bankruptcy balance sheet will after the reorganization end up with "new" Common Stockholders Equity of $750,000 c. The "old" Subordinated Debt of $3,000,000 in the last pre-bankruptcy balance sheet will after the reorganization end up with "new" Subordinated Debt of $1,000,000, and "new" Common Stockholders Equity of $1,000,000