Actions described comply with the bankruptcy code

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Arjen Corp. filed for bankruptcy protection under Chapter 11.

The following table describes certain actions the company plans to take as a part of its reorganization plan. Arjen submitted the plan to the bankruptcy court.

Determine whether the actions described comply with the bankruptcy code, and select the option identifying whether the bankruptcy court will consider or disregard the action in the plan based on the grounds of fairness and feasibility.

1. Arjen's reorganization plan calls for a reduction of debt from $2.8 billion to $1.5 billion by converting 80% of the debt into equity. Will the court consider this action? (Yes/No)

2. In the reorganization plan, Arjen plans to pay its unsecured creditors about 88 cents for each dollar they're owed, primarily in stock, and secured creditors will receive 17 cents for each dollar they're owed. Will the court consdier this action? (Yes/No)

3. Arjen's reorganization plan includes reduction in payroll costs expect to come from negotiations with labor unions to accept lower wages and less restrictive work rules. Will the court consider this action? (Yes/No)

Reference no: EM132036710

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