As part of the reorganization plan, the loan is exchanged for a new loan in the amount of $820,000 plus 35% of the new stock issued. The note is exchanged for a new note in the amount of $1,600,000 plus 35% of the new stock issued. The existing common stock is canceled; the old shareholders receive 30 percent of the new stock.

Answer rating: 100% (QA)

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