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Mid-Texas Healthcare System: A Case Study

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A debenture is “an unsecured bond, and as such, it has no lien against specific property as security for the obligation. For example, Mid-Texas Healthcare System has $5 million of debentures outstanding. These bonds are not secured by real property but are backed instead by the revenue-producing power of the corporation” (Gapenski, 2008, p.345). Debenture holders are, “therefore, general creditors whose claims, in the event of bankruptcy, are protected by property not otherwise pledged. In practice, the use of debentures depends on the nature of the firm’s assets and general credit strength” (Gapenski, 2008, p. 345).
f) Subordinate debenture has a claim on assets in the event of bankruptcy only after senior debt has been paid off. In

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