Duplan Case

I. Introduction and Comment * The Du pattern Reorganization Plan and Proposed agree Settlement The reorganization final cause of Duplan Corporation estimated its balance of money at $27.1 one million million million and computer storage at $27.2 million. The nub $54.3 million were distributed to its creditors that included banks, trade creditors, mark off holders, debentures holders as well as some small claimers. Since the assets were less(prenominal) than $69 million of allowable debt, the original loveliness owners pass on be wiped out and there were some controversies among creditors regarding to distribution of funds and investment trust. In our opinion, the reorganization plan of Duplan Corporation belowestimated its assets and distributed available currency and new painss unfairly. (1) Both property and the new common stock after reorganization were undervalued. The Plan estimated $30 million property at the end of fiscal year, Septe mber 1979. Subtracting $2.9 million for the memorial tablet costs, tax claims and small claims, there were $27.1 remain for distribution. However, the plan clutches the fact that the available immediate payment was in interest look accounts or certificates that could generate interest income. Since the date of the plan was as the end of the fiscal year, September 1980, one-year interest income should be added to the available capital balance. Besides, the operating divisions of Duplan Corporation were still generating cash flows during 1980. Therefore after subtracting the working balances of the operating divisions, the remaining cash flows should get into the cash balance as well. Consequently, the value of the sodality (see detailed calculation in the following parts) actually exceeded the touchstone of claims. All the claims could be settled replete(p)y and there were remaining equity to be distributed to its original equity owners. (2) The settlem ent under the plan was not fair, especially ! for the tune holders Even though the subordinated note holders $6.1 million claims were fully...If you want to get a full essay, golf club it on our website: OrderCustomPaper.com

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