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Chapter 7 Bankruptcy Liquidation Problem

Williams Manufacturing Company is in Chapter 7 of bankruptcy, and it is to be liquidated. Sale of its fixed assets which are pledged as collateral to the mortgage bondholders produced $300,000, while its current assets produced $150,000. Trustee's costs (which are not recorded on the company's balance sheet) were $40,000. No single worker was due more than $2,000 and there were no unfunded Pension liabilities, and all property taxes have been paid. The Subordinate debt is subordinate to the Notes Payable. Following is the current balance sheet of Williams Manufacturing:

Current Assets $300
Net Fixed Assets $450
Total Assets $750

Accounts Payable $40
Accrued Taxes $30
Accrued Wages $20
N/P $135

1st Mortgage Bond $225
2nd Mortgage Bond $150
Debentures $150
Subordinate Debt $75
Common Stock $38
Retained Earnings ($113)
Total Liabilities & Share Holders Equity $750

Please calculate the amount and percentages that each creditor will receive from the liquidation proceeds based upon the information provided.

Please explain your answers in detail.


Solution Summary

This solution provides a complete computation of the given finance problem formatted in Excel.