Solution-How much will mortgage bondholders receive

How much will mortgage bondholders receive

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Reference no: EM13856444

Question 5. Pierre Imports will be liquidated. Its current balance sheet is shown below. Current assets are sold for $600,000 and fixed assets are sold for $1,000,000. All fixed assets are pledged as collateral for all mortgage bonds. Subordinated debentures are subordinate only to notes payable. Trustee costs are $100,000.

Sale of Current Assets	600,000
Sale of Fixed Assets	1,000,000
Trustee Costs	100,000
	Balance Sheet Before Default
Current Assets	1,200,000	Accounts payable	400,000
Net fixed assets	1,800,000	Accrued taxes	80,000
		Accrued wages	60,000
		Notes payable	60,000
		Total current liabilities	600,000
		First-mortgage bonds	900,000
		Second-mortgage bonds	400,000
		Debentures	500,000
		Subordinated debentures	300,000
		Common stock	200,000
		Retained earnings	100,000
Total assets	3,000,000	Total claims	3,000,000

a. How much will SHs receive?

b. How much will mortgage bondholders receive?

c. How much will priority creditors receive?

d. Identify the remaining general creditors. How much will each receive before subordination adjustment and after adjustment?

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How much will mortgage bondholders receive

Reference no: EM13856444

Reference no: EM13856444

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