Suppose Lehman has $2 billion of senior bank loans outstanding and $4 billion of subordinated bonds outstanding at the time of its bankruptcy filing. Its creditors are currently in the midst of a Chapter 11 reorganization and are negotiating about the value of Lehmans assets, which determines how the reorganized firms equity will be shared between bank lenders and bondholders.

What do the banks and bondholders receive, and what are their respective recovery rates, if the reorganized value of Lehman is $5 billion?

What if the reorganized value is $4 billion?

What if Lehman is liquidated for $3 billion?