How much will each class of investors receive

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Reference no: EM13343575

Southwestern Wear Inc. has the following balance sheet:

Current assets

$1,875,000


Accounts payable

$375,000

Fixed assets

1,875,000


Notes payable

750,000




Subordinated debentures

750,000




Total debt

$1,875,000




Common equity

1,875,000

Total assets

$3,750,000


Total liabilities and equity

$3,750,000

The trustee's costs total $210,250, and the firm has no accrued taxes or wages. Southwestern has no unfunded pension liabilities. The debentures are subordinated only to the notes payable. If the firm goes bankrupt and liquidates, how much will each class of investors receive if a total of $3 million is received from sale of the assets?

Distribution of proceeds on liquidation:

1. Proceeds from sale of assets

$ ______

 

2. First mortgage, paid from sale of assets

$ ______


3. Fees and expenses of administration of bankruptcy

$ _______


4. Wages due workers earned within 3 months
prior to filing of bankruptcy petition

$ ________


5. Taxes

$ ________


6. Unfunded pension liabilities

$ ________


7. Available to general creditors

$ ______


 

Distribution to general creditors:


Claims of
General
Creditors



Claim
(1)


Application of 100%
Distribution
(2)

After
Subordination
Adjustment
(3)


Percentage of
Original Claims Received
(4)

Notes payable

$ ________

$ ________

$ ________

________ %

Accounts payable

$ ________

$ ________

$ ________

________ %

Subordinated debentures

$ ________

$ ________

$ ________

________ %

Total

$ ________

$ ________

$ ________


The remaining $ ________ will go to the common stockholders.

Reference no: EM13343575

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