Fitch treats the notes - which are secured by Birla Carbon's equity in key entities holding the carbon black business - as senior unsecured, as these pledges only entitle bondholders to
residual claim in equity and do not enhance repayment priority in liquidation.
As a result, the authority issued a total of USD112,177,124 in aggregate principal amount of 11 percent senior secured notes due 2022 and USD49,857,294 in aggregate principal amount of
residual claim certificates in exchange for existing notes validly tendered by the expiration date and accepted by the authority.
Shareholder value is the sum of the certain cash flows to shareholders at date 1 (i.e., zero in the absence of insurance) and the value of the
residual claim on second-date cash flow, given state prices g(S).
In the case of Union Central, a
residual claim is initiated when an insured can perform some but not all of the substantial and material duties of their occupation and has a loss of income of at least 15%, or is unable to work in their occupation more than 80% of the time as was usual prior to the start of their claim.
ultimate concerns, is the notion of a
residual claim. Thus, in NIE
These three sets of rights are referred to as "use right", "income right" and "alienation right", respectively, in the following text, although the former two are sometimes known as "control right" and "
residual claim right" in the literature on firm or team production.
Shareholders care about the value of the
residual claim on the corporation.
* During a
residual claim, income drops because of economic reasons rather than medical reasons.
Residual claim on income and Senior claim on income and assets
After five years, if the physician enters another occupation fitted for by education, training or experience, said Brokerage Solutions' Petsche, that person would move to a
residual claim in which a percentage of lost income would be paid.
Since shareholders have
residual claim on the firm's cash flow and the creditors a fixed claim, increases in the value of the firm should accrue to the shareholders.
The
residual claim to these assets after the investors are repaid therefore is a valuable property right which the settlor is unwilling to give up.
