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    Corporate Liquidation

    Uploaded by

    Michael Bongalonta
    This document provides examples of calculations for distributing assets in corporate liquidation proceedings. It addresses topics like determining secured vs unsecured claims, calculating percentages of recovery for unsecured creditors, and applying those percentages to determine final distributions. The examples show how liquidators must prioritize different classes of claims and allocate remaining assets accordingly based on priority and secured status.

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    Corporate Liquidation

    Uploaded by

    Michael Bongalonta
    41 views14 pages
    This document provides examples of calculations for distributing assets in corporate liquidation proceedings. It addresses topics like determining secured vs unsecured claims, calculating percentages of recovery for unsecured creditors, and applying those percentages to determine final distributions. The examples show how liquidators must prioritize different classes of claims and allocate remaining assets accordingly based on priority and secured status.

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    CORPORATE LIQUIDATION

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    This document provides examples of calculations for distributing assets in corporate liquidation proceedings. It addresses topics like determining secured vs unsecured claims, calculating percentages of recovery for unsecured creditors, and applying those percentages to determine final distributions. The examples show how liquidators must prioritize different classes of claims and allocate remaining assets accordingly based on priority and secured status.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    41 views14 pages

    Corporate Liquidation

    Uploaded by

    Michael Bongalonta
    This document provides examples of calculations for distributing assets in corporate liquidation proceedings. It addresses topics like determining secured vs unsecured claims, calculating percentages of recovery for unsecured creditors, and applying those percentages to determine final distributions. The examples show how liquidators must prioritize different classes of claims and allocate remaining assets accordingly based on priority and secured status.

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    © All Rights Reserved
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    You are on page 1of 14

    CORPORATE LIQUIDATION

    1. Fully Secured (Fair Value of the Asset) 30, 000


    Unsecured (25% x 10, 000) 2, 500
    Total Amount Received 32, 500

    2. Total claims including interest 208, 000

    Amount Secured 120, 000


    Unsecured (75% x 88, 000) 66, 000
    Total Amount Received 186, 000
    `
    3. Principal 15, 000, 000
    Interest 200, 000
    Fully Secured 15, 200, 000

    4. Total Liabilities
    Accounts Payable 160, 000
    Mortgage Payable 200, 000
    Total 360, 000
    Less:
    Asset fully pledged 200, 000
    Balance (Unsecured) 160, 000
    Total Assets at Fair Value
    Current Assets 50, 000
    Land and Building 240, 000
    Total 290, 000
    Less:
    Asset fully pledged 200, 000
    Net Free Assets 90, 000
     

    Deficiency = Net Free Assets – Unsecured Liability


    = 90, 000 – 160, 000 = 70, 000
    5.
    Net Free Assets/ Unsecured Liability = 90, 000/ 160, 000
    = 0.5625 or 56.25%
    6. Total Assets, RV
    Current Assets 33, 000
    Land 90, 000
    Building and Equipment 110, 000
    Total 233, 000
    Less:
    Unsecured with Priority 34, 000
    Partially secured
    (FV of land pledged to N/P) 90, 000
    Net Free Assets 109, 000
    Unsecured without priority
    Accounts Payable 83, 000
    Bonds Payable 70, 000
    Notes Payable30, 000
    Total 183, 000

    Percentage of Recovery 109, 000/ 183, 000 = 60%

    Notes Payable:
    Amount Secured 90, 000
    Recovery
    (30, 000 x 60%) 18, 000
    Received 108, 000
    7. Total Assets, RV 246, 000
    Less:
    Unsecured with priority 42, 000
    Fully Secured (face of liability) 70, 000
    Partially, RV of assets 50, 000
    Net Free Assets 84, 000
     
    Total Unsecured Liability without priority
    Unsecured creditors 200, 000
    Portion of partially secured
    (130, 000- 50, 000) 80, 000
    Total 280, 000
    Percentage of Recovery= 84, 000/ 280, 000 = 30%

    Recovery of partially secured


    Secured amount 50, 000
    Remaining portion
    (80, 000 x 30%) 24, 000
    Amount recovered 74, 000
    8. Debt #2
    Secured amount 100, 000
    Amount to be recovered from 70, 000 (squeeze) 42, 000
    Desired amount 142, 000

    Percentage of recovery= 42, 000/ 70, 000 = 60%


     
    Net Free Assets = 60% ( 230, 000 + 30, 000 + 70, 000)
    = 198, 000

    RV= 198, 000 + Unsecured liability with priority


    RV= 198, 000 + 110, 000 = 308, 000
    9. Total Realizable Value of Assets 75, 000
    Less:
    Fully Secured creditors 40, 000
    Unsecured creditors with priority 4, 000
    Balance of Assets 31,000

    Total Unsecured Liability 45, 250


    Less:
    Net Free Assets 31,000
    Deficiency 14, 250
    10. Total Assets, RV 405, 000
    Less:
    Liabilities with priority 35, 000
    Fully secured 130, 000
    Partially Secured 60, 000
    Net Free Assets 180, 000
    11.
    Liq. Value of sec. 10, 000
    Recovery
    [(50, 000- 10, 000) x 50%] 20, 000
    30, 000
    12.

    RV of inventory 19, 200


    Remaining
    [(23, 940- 19, 200)x 78 %] 3, 697
    Total 22, 897
    13.
    Total RV of Assets 167, 000
    Less:
    Unsecured creditors with priority 7, 000
    Fully Secured Creditors 30, 000
    Partially Secured Creditors 52, 000
    Net Free Assets 78, 000
    Percentage of recovery = 78, 000/ [112, 000 (60, 000- 52, 000)]
    = 65%
    Answer: 7, 000
    14.

    30, 000

    15. Secured 52, 000


    Recovery
    (8, 000x65%) 5, 200
    57, 200

    16. 112, 000 x 65% = 72, 800


    THANK
    YOU!

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