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Financial Distress and Bankruptcy

Financing for Small Dot-Com Companies

Many of the small "dot-com" companies got financing in the form of an instrument called convertible debt. This is like ordinary debt, in that it pays a regular interest amount. But debt-holders have the right to convert it to equity. Why do you think these companies chose this instrument? Do you think it was a good idea? Reme

Capital Structure Decision Types

1.Discuss types and sources of corporate debt and bond covenants. 2.Discuss the pros and cons of debt financing. Provide examples. 3.Discuss factors that influence the firm's choice of capital structure. Describe how taxes affect the choice of debt versus equity. 4.Explain what is meant by "indirect costs of financial dist

Costs and factors of bankruptcy

A) What are bankruptcy costs and what costs does it not take into consideration? B) A company can suffer from increased expenses if it experiences financial difficulties even though it does not go bankrupt. Why? Please fully elaborate on definitions and explanations.

About Shareholders and Debtors

The balance sheet of Company X is as follows: In millions of USD: Assets Working capital 20 Investments 10 Total 30 Liabilities 1-year loan 25 Equity 5 Total 30 Which party (shareholders or debtors) wins if Company X: a.) Distributes $10 million in dividends. b.) Shuts down and sells its possessions. From worki

Bankruptcy and corporate ethics

Continental Airlines once filed for bankruptcy, at least in part, as a means of reducing labor costs. Whether this move was ethical or proper was hotly debated. Give both sides of the argument.

Chapter 7 Bankruptcy Liquidation Problem

Williams Manufacturing Company is in Chapter 7 of bankruptcy, and it is to be liquidated. Sale of its fixed assets which are pledged as collateral to the mortgage bondholders produced $300,000, while its current assets produced $150,000. Trustee's costs (which are not recorded on the company's balance sheet) were $40,000. No sin

Professional Ethics in Budgeting

Project Paper Topic: Professional Ethics in Budgeting Subtopic: Ethics has recently become a hot topic in the business world. Ethical dilemmas arise on regular basis. Use external resources to find an example of ethical dilemmas or challenges regarding budgeting. Feel free to expand or focus on a particular issue deal

Review the General Motors bankruptcy that occurred during 2009. What type of bankruptcy was it (what Chapter) and what kinds of decisions went into the bankruptcy declaration?

Review the General Motors bankruptcy that occurred during 2009. What type of bankruptcy was it (what Chapter) and what kinds of decisions went into the bankruptcy declaration? How did the creditors of GM and workers and related businesses at GM fare in the bankruptcy process? What do you think were the positives and negatives of

Employees Rights and Employer Responsibilites

Read the following scenario about Mary. Based upon the information in the text and your own online research, discuss Mary's ethical options. What do you think that she should do? Mary recently graduated from college and landed her first corporate job. She works as an administrative assistant for an international corporation t

Individual: Bankruptcy Problem

See the attached file(s). Individual: Bankruptcy a) Problem 30.3 (p. 56): Propose a distribution of assets consistent with the absolute priority rule. b) Problem 30.4 (p. 56): Propose a distribution of assets consistent with the absolute priority rule. c) Delphi Corporation Assignment i) Delphi, an automobile suppl

Subprime Crisis

Subprime Crisis: A proposal in which you cite at least three recent, high quality scholarly finance or economics journal references that you expect to use.

Case Study: Delta Airlines Chapter 11 bankruptcy emergence

Just need help with questions 3, and 4. Delta Airlines Rises from the Ashes. On April 30, 2007, Delta Airlines (Delta) emerged from bankruptcy leaner but still an independent carrier after a 19-month reorganization, during which it successfully fought off a $10 billion hostile takeover attempt by US airways. The challeng

Accounts Receivable Journal Entries-Writeoff and Recovery

Rupert Manufacturing Co. sold $20,000 of merchandise to Mr. J. Hart on May 14, 2007, on account. The company attempted collection efforts starting in October of the same year. Hart filed for bankruptcy on November 18, and the company wrote off his account receivable at that time. On December 29, 2007, Rupert Manufacturing re

Business Law: Important information about Bankruptcy

A committee chairman has revealed that your supervisor wants you personally to prepare a report discussing the following options for a client who is in serious business trouble. Your firm's client just recently revealed that his company was $2.9 million in debt and that his company is not incorporated. He has reluctantly asked i

Ethical Challenges

1. What are some ethical challenges the financial services industry faces? What can be done to mitigate the potential for unethical behavior in the financial services industry? 2. Distinguish between ethical and unethical behavior in a bankruptcy setting 3. Explain ethical challenges an accountant could face in recognizing

Which of the following is most correct?

Which of the following statements is most correct? a. Our bankruptcy laws were enacted in the 1800s, revised in the 1930s, and have remained unaltered since that time. b. Federal bankruptcy law deals only with corporate bankruptcies. Municipal and personal bankruptcy are governed solely by state laws.

Corporate Finance sample questions (cash flow, leverage, NPV)

I am seeking assistance with the following problems... #2 Grommit Engineering expects to have net income next year of $20.75 million and free cash flow of $22.15 million. Grommit's marginal corporate tax is 35%. a. If Grommit increases leverage so that its interest expense rises by $1 million, how will its net income change?

WACC / Optimal debt & capital structure

A Firm is unleveraged and has a constant EBIT of $2 million per year. Tax rate is 40% and market value is $12 million. Debt is being considered to buy back stock. The present value of financial distress costs are $8 million and the probability of distress would with leverage according to the following: $2,500,000 of debt -0%, $5

Asymmetric Information and Capital Structure

Info System Technology (IST) manufacturers microprocessor chips for an appliances and other applications. IST has no debt and 100 million shares outstanding. The correct price for these shares is either $14.50 or $12.50 per share. Investors view both possibilities as equally likely, so the share currently trade for $13.50. I

Tax Issues for Sheryl's ownership of Barney Corporation stock

On January 12 of the current year, Barney Corporation, a publicly-held corporation, files for bankruptcy. During the bankruptcy proceedings it is determined that creditors will only receive 10% of what they are owed and that the shareholders will receive nothing. Sheryl, a calendar-year taxpayer, purchased 1,000 shares of Barney