TWA: The Second Bankruptcy Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

In May 1995, about 19 months after the release of Chapter 11 bankruptcy is filed in 1993, Trans World Airlines issued a proxy statement to obtain the consent of its shareholders and certain other creditors for the restructuring plan of debts. Prospectus contains two financial plans for the organization, one for out-of-court restructuring, and the other for "prepackaged" Chapter 11 bankruptcy. Sharing is available in two plans were nearly identical, but prepackaged restructuring plan requires a lower speed reception. Under the plan, creditors would forgive TWA significant amount of the company's debt in exchange for shares and other equity instruments, and the revised terms on the remaining debt. Creditors will own about 70% of the reorganized company's common stock and, mostly employees, will see its stake in the airline will shrink to about 30% from 45%. Adam Chandler, the owner of 8% of TWA notes, read with interest the proxy. He had to decide how to cast his vote - for or against the reorganization of troubled carrier offers. TWA was worth more in the near future than it would be if its assets were liquidated? What were the assets really worth? The company will be in line with expectations of management? TWA financial results will be enough to maintain the elevated cost of equity post bankruptcy, or should Chandler trying to derail the deal in the hope of getting more debt component of its restructuring, claims? "Hide
by Mary E. Burt, Nese Yildiz Source: Stanford Graduate School of Business 25 pages. Publication Date: May 12, 1999. Prod. #: A178-PDF-ENG