The assignment focuses on Arch Wireless, Inc. -Restructuring Debt and Liabilities. Also, briefly clarify which problems that you consider the most pressing ones to solve, then focus on your solutions and recommendations and the analyses and arguments motivating them.
Arch Wireless, Inc. -Restructuring Debt and Liabilities
Instructions: Arch Wireless, Inc. Restructuring Debt and Liabilities
You get no points for your ability to re-tell the case, so avoid wasting space on describing the case or repeating case facts. Firstly, assume that the reader has read the case carefully and know the facts. Secondly, briefly clarify which problems that you consider the most pressing ones to solve, then focus on your solutions and recommendations and the analyses and arguments motivating them. The case text is in Book, Gilson, 2010 Creating value through corporate restructuring Case studies in bankruptcies, buyouts, and breakups (pages 280-310). The case specifies six questions, focus on Question 4 (Page 294). Assume a substantial consolidation approved.
Arch Wireless, Inc. -Restructuring Debt and Liabilities
Also, based on your estimate of Arch’s enterprise value, design a Chapter 11 plan of reorganization for Arch, assuming you are the debtor. Additionally, your plan should propose specific distributions of new securities and/or cash to Arch’s various claimholders. Assume that $300 million of debt and new common stock are available to distributed under the plan. A company that is considering debt restructuring is likely experiencing financial difficulties that cannot be easily resolved. Under such circumstances, the company faces limited options – such as restructuring its debts or filing for bankruptcy. Restructuring existing debts is obviously preferable and more cost-effective in the long term, as opposed to filing for bankruptcy.
Arch Wireless, Inc. -Restructuring Debt and Liabilities
How to Achieve Debt Restructuring. Companies can achieve debt restructuring by entering into direct negotiations with creditors to reorganize the terms of their debt payments. Debt restructuring is sometimes imposed upon a company by its creditors if it cannot make its scheduled debt payments. Here are some ways that it can achieved: It deemed beneficial to let the company continue to operate as a going concern and allow the creditors to involved in its operations. This can mean that the original shareholder base will have a significantly diluted or diminished stake in the company.
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