cial Topics below (in thousands of dollars). The court, after trying unsuccessfu
ID: 2651504 • Letter: C
Question
cial Topics below (in thousands of dollars). The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation under Chapter 7. Sal mortgage bondholders, brought in $400,000, while the current assets were sold for another $200,000. Thus, the total proceeds from the liquidation sale were $600,000. The trustee's costs amounted to $50,000; no single worker was due more than $2,000 in wages; and there were no unfunded pension plan liabilities. e of the fixed assets, which were pledged as collateral to the $ 50 Current assets 4 Net fixed assets 400 Accounts payable 600 Accrued taxes 2 Accrued wages Notes payable Total current liabilities First-mortgage bonds 300 Debentures Subordinated debenturesb Common stock Retained eamings 100 (150) $1,000 Total assets $1,000 Total claims All fixed assets are pledged as collateral to the mortgage bonds. o Subordinated to notes payable only a. How much will McDaniel's shareholders receive from the liqui b. How much will the mortgage bondholders receive? c. Who are the other priority claimants (in addition to dation? holders)? How much will they receive from the the mortgage bond- liquidation? How much will each receive d. Who are the remaining general creditors? from the distribution before subordination adjustment? What is the effest of adjusting for subordination?
Explanation / Answer
Shareholder will nothing receive.
Mortgage bondholder will recevie full payment $500000
Total Realisation $600,000.00 Less:Trustee Cost $50,000.00 Net Fund Available $550,000.00 Payment of Tax $40,000.00 Mortgage Bond Holders $500,000.00 Balance $10,000.00Related Questions
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