In re Pullman Const. Indus. Inc.
United States Bankruptcy Court for the Northern District of Illinois
107 B.R. 909 (1989)
Pullman Construction Industries, Inc., and its subsidiaries, Pullman Sheet Metal Works, Inc.; Preferred Piping, Inc.; and Mid-City Architectural Iron Co. (collectively, Pullman) (debtor), filed for Chapter 11 protection in United States bankruptcy court. Wells Fargo (creditor) had a first-priority security interest in all Pullman’s assets, the going-concern value of which was subject to some dispute. Pullman’s valuation experts used the capital asset pricing model (CAPM). Because Pullman did not have a publicly traded stock, the company’s beta—a measure of the relative volatility of a company’s stock price—was derived from a group of 18 publicly traded peer companies. Pullman’s experts arrived at 18 percent as the appropriate discount rate to apply to future cash flows. This discount rate resulted in $3,411,000 as the present value of free cash flows, to which $2,136,000 in nonoperating assets was added for a going-concern value of $5,547,000. This figure reflected a bump in anticipated revenues from 1989 to 1990 in the form of large commercial construction projects that Pullman hoped to obtain after confirmation of the bankruptcy plan. Wells Fargo sought an even higher valuation.
Rule of Law
Holding and Reasoning (Schmetterer, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 707,000 law students since 2011. Some law schools—such as Yale, Berkeley, and Northwestern—even subscribe directly to Quimbee for all their law students.Unlock this case briefRead our student testimonials
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.Learn about our approachRead more about Quimbee
Here's why 707,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 44,500 briefs, keyed to 983 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.