Duchon Industries had the following balance sheet at the time it defaulted on it

Question

Duchon Industries had the following balance sheet at the time it defaulted on its interest payments and filed for liquidation under Chapter 7. Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, brought in $900 million, while the current assets were sold for another $400 million. Thus, the total proceeds from the liquidation sales were $1,300 million. Trustee's costs amounted to $1 million; no single worker was due more than $2,000 in wages; and there were no unfunded pension plan liabilities. Determine the amount available for distribution to all claimants.

Explanation / Answer

Proceeds from sale of fixed assets 900 Proceeds from sale of current assets 400 Total amount available for claimants 1300 Priority claims: Trustee's expenses 1 Worker's wages due (2000*no. of employees) Government taxes due 0 Distribution to first mortgage (paid from sale of fixed assets) 900 Total preliminary distributions to priority claimaints 901 Available for other claimants 399

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