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(iii) the value of SMHC’s interest in the Carolco
securities at the time the SMHC stock was contributed
to SMP.
Mr. Shapiro concluded:
(i) the stock that CLIS contributed to SMP had no
value at the time it was contributed;
(ii) the $79,912,955 of indebtedness that SMHC
owed to CLIS and the $974,296,600 of indebtedness that
SMHC owed to Generale Bank had no value at the time
those items were contributed to SMP; and
(iii) the Carolco securities that SMHC owned had
no value at the time the SMHC stock was contributed to
SMP.
In reaching his conclusions, Mr. Shapiro conducted an economic
analysis of the CDR transaction and the events leading up to that
transaction.
Mr. Shapiro first observed that as of October 10, 1996, the
only asset in SMHC was the Carolco securities, which he
determined were worthless.221 In Mr. Shapiro’s opinion, because
there was no value in any underlying assets in SMHC, the SMHC
stock and the approximately $1 billion in indebtedness were also
worthless as of October 10, 1996.
221 Relying on the information contained in the bankruptcy
plans of reorganization, including the various scenarios
discussed in the disclosure statements, Mr. Shapiro observed that
the total estimated amount of asserted claims that had a higher
priority than SMHC’s Carolco securities was $557,482,968. Thus,
for SMHC to receive anything, the net proceeds from Carolco’s
liquidation would have to exceed $557,482,968. The net proceeds
were projected to be far less, however--between $66,491,040 and
$93,027,900. On the basis of this and other information, Mr.
Shapiro concluded that there was no reasonable expectation of
receiving anything on the Carolco securities as of Dec. 11, 1996.
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