Why someone pay given amount for bonds of a bankrupt firm

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Reference no: EM131338451

The bonds of Columbia Gas paid no interest in 1993 because the firm had declared bankruptcy.

One issue of these bonds, the 8 1⁄4 percent coupon bonds due in 1996, was selling at 109 percent of par value, or for approximately $1,090. Why would someone pay $1,090 for the bonds of a bankrupt firm?

Reference no: EM131338451

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