John T. Barrett, Jr. and Jane W. A. Barrett - Page 8

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          off commercial paper maturing on February 12, 1990, word of                 
          Drexel’s liquidity problem spread through the market, and some              
          entities refused to trade with Drexel.                                      
          Drexel’s Bankruptcy Proceedings                                             
               On February 13, 1990, Drexel was advised by the SEC and the            
          Federal Reserve Bank of New York to file a petition pursuant to             
          Chapter ll of the Bankruptcy Code (chapter 11).  Drexel’s board             
          of directors agreed to commence a chapter 11 case and, on that              
          date, Drexel filed a voluntary petition for relief pursuant to              
          chapter 11 in the U.S. Bankruptcy Court for the Southern District           
          of New York (bankruptcy court).                                             
               Beginning on the date of the bankruptcy filing, Drexel began           
          to wind down certain of its affairs and operations and                      
          significantly reduced its operating expenses.  After the petition           
          was filed, Drexel began to consider alternatives for the ultimate           
          resolution of its chapter 11 case.  Financial projections for               
          Drexel and its subsidiaries were prepared, including sales values           
          for assets and an analysis of liabilities.  The problems                    
          presented by (1) growing litigation against Drexel, including               
          many suits pursuant to the securities laws, (2) the need to                 
          resolve that litigation, (3) potential claims against Drexel by             
          the Internal Revenue Service (IRS), and (4) the difficulty of               
          quickly disposing of many of Drexel’s assets at amounts near                
          their book value weighed against liquidation of Drexel and                  
          indicated the need for a reorganization of Drexel and an entity             




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