Question

1. When DynoCorp filed for bankruptcy, its balance sheet capital structure (in millions) was: $80 Senior Secured, $120 Senior Unsecured, $50 Subordinated, $30 Junior Subordinated, $40 Preferred Stock, and Common Equity of $150. If the actual total market value of its assets was $210 million, how much would be paid to each level of the capital structure?

Answer 1

A	B	C	D	E	F	G	H	I
2
3		Seniority ranking are as follows:
4		1)	Senior Secured
5		2)	Secured
6		3)	Senior Unsecured
7		4)	Senior Subordinated
8		5)	Subordinated
9		6)	Junior Subordinated
10		7)	Preferred Stock
11		8)	Common Stock
12
13		For the given capital structure following will be the senority order:
14				Amount	Cumulative Amount
16		1)	Senior Secured	$80	$80
18		2)	Senior Unsecured	$120	$200
19		3)	Subordinated	$50	$250
20		4)	Junior Subordinated	$30	$280
21		5)	Preferred Stock	$40	$320
22		6)	Common Stock	$150	$470
23
24		Since the total market value of asset is $210 million, therefore
25		on liquidation amount paid to each capital structure will be as follows:
26				Amount	Cumulative Amount
27		1)	Senior Secured	$80	$80
28		2)	Senior Unsecured	$120	$200
29		3)	Subordinated	$10	$210
30

Formula sheet

A	B	C	D	E	F	G
2
3		Seniority ranking are as follows:
4		1)	Senior Secured
5		2)	Secured
6		3)	Senior Unsecured
7		4)	Senior Subordinated
8		5)	Subordinated
9		6)	Junior Subordinated
10		7)	Preferred Stock
11		8)	Common Stock
12
13		For the given capital structure following will be the senority order:
14				Amount	Cumulative Amount
16		1)	Senior Secured	80	=E15
18		2)	Senior Unsecured	120	=E16+F15
19		3)	Subordinated	50	=E17+F16
20		4)	Junior Subordinated	30	=E18+F17
21		5)	Preferred Stock	40	=E19+F18
22		6)	Common Stock	150	=E20+F19
23
24		Since the total market value of asset is $210 million, therefore
25		on liquidation amount paid to each capital structure will be as follows:
26				Amount	Cumulative Amount
27		1)	Senior Secured	80	=E25
28		2)	Senior Unsecured	120	=E26+F25
29		3)	Subordinated	10	=E27+F26
30