List the bankruptcy costs incurred by the company in Business Snapshot 1.1. BUSINESS SNAPSHOT 1.1 The Hidden

List the bankruptcy costs incurred by the company in Business Snapshot 1.1. 

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BUSINESS SNAPSHOT 1.1 The Hidden Costs of Bankruptcy: A Hypothetical Scenario Several years ago, a company had a market capitalization of $2 billion and $500 million of debt. The CEO decided to acquire a company in a related industry for $1 billion in cash. The cash was raised using a mixture of bank debt and bond issues. The price paid for the company was justified on the basis of potential synergies, but key threats to the profitability of the company were overlooked. Many of the anticipated synergies were not realized. Furthermore, the company that was acquired was not profitable and proved to be a cash drain on the parent company. After three years, the CEO resigned. The new CEO sold the acquisition for $100 million (10% of the price paid) and announced that the company would focus on its original core business. However, by then the company was highly leveraged. A temporary economic downturn made it impossible for the company to service its debt and it declared bankruptcy. The offices of the company were soon filled with accountants and lawyers representing the interests of the various parties (banks, different categories of bondholders, equity holders, the company, and the board of directors). These people directly or indirectly billed the company about $10 million per month in fees. The company lost sales that it would normally have made because nobody wants to do business with a bankrupt company. Intangible assets, such as the relationships built up over many years with customers, were lost. Key senior executives, who had many years of valuable experience, left. After two years and three reorganization attempts, an agreement was reached among the various parties, and a new company with a market capitalization of $700,000 was incorporated to continue the remaining profitable parts of the business. The shares in the new company were entirely owned by the banks and the bondholders. The shareholders got nothing.