The Beacon Has Proposed a Reorganization Plan Based on a Going-Concern

The Beacon has proposed a reorganization plan based on a going-concern value of $1.3 million after court costs and delinquent wages and taxes.The proposed financial structure is $400,000 in new mortgage debt,$200,000 in subordinated debt,and $700,000 in new equity.Secured creditors currently have a mortgage lien for $600,000 and the unsecured creditors are owed $950,000.What should the unsecured creditors receive if the reorganization plan is approved?

A) $700,000 in equity securities
B) $200,000 in subordinated debt and $700,000 in equity securities
C) $950,000 in new equity securities
D) 61.3 percent of the new mortgage debt,61.3 percent of the subordinated debt,and 61.3 percent of new equity
E) 82.6 percent of the subordinated debt and 82.6 percent of new equity

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