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Lecture_21_student - Lecture 21 Bankruptcy Reorganization...

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Lecture 21: Bankruptcy, Reorganization and Liquidation: II BD Chapter 25
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Topics Illustration of a Reorganization. Liquidation under Chapter 7.
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Illustration of a Reorganization Columbia Software Company is a regional firm that specializes in selling accounting software. The company had been suffering losses of $2.5 million in the past year. The firm was insolvent: book value of liabilities were greater than the market values of its assets. The firm filed a petition with a federal court for reorganization under Chapter 11. Filed on June 13, 2009
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Balance Sheet: Columbia Software
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Illustration of a Reorganization Per reorganization plan, the firm is seeking to combine with a larger software company. On August 3, 2009, Moreland Software made a formal proposal to takeover Columbia Pay $6 million first-mortgage bonds. Pay $250,000 in taxes owed by Columbia. Provide 40,000 shares of Moreland stock. Market price of Moreland stock is $75 per share.
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