Total Postpetition Liabilities (total debt after the petition) reorganization was $150,000 Prepetition liabilities (debt...
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Total Postpetition Liabilities (total debt after the petition) reorganization was $150,000
Prepetition liabilities (debt before the request for reorganization): Accounts payable $ 300,000 Taxes payable $ 80,000 Interest payable $ 45,000 Bank Loan $ 500,000 Capital stock $ 600,000
The following is the reorganization plan:
1. The bank agrees to accept common stock of $200,000 and Senior debt of $180,000
2. Tax payable is paid immediately
3. Interest payable is eliminated
4. Creditors (Accounts payable) agree to accept common stock of $ 100,000 and senior debt of $ 90,000
5. Shareholders will exchange their shares for $100,000 of common stock.
Requested: 1. Calculate the reorganization value!
2. Calculate the gain on debt discharge & make a debt settlement journal before the application (prepetition claim) and exchange of shares by shareholders
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