8/12/2019 Corporate Liquidation - Ana Naguit

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PROBLEM 5

The following data are taken from the statement of affairs of the John Company.

 Assets pledged with fully secured creditors (realizable value, P190,000) P240,000 Assets pledged with partially secured creditors (realizable value, P90,000) P110,000Free assets (realizable value, P102,000) P160,000Fully secured creditor claims P91,000Partially secured creditor claims P120,000Unsecured creditor claims with priority P30,000General unsecured creditor claims P350,000

What is the amount that will be paid to partially secured creditors?

a.P98,500b.P103,500c. P108,500d. P109,500

Answer: B

Solution:

Realizable Value of all Assets (P190,000 + P90,000 + $102,000) P382,000 Allocated to:

Fully secured creditors (91,000)Partially secured creditors (90,000)Unsecured creditors with priority (30,000)Remainder available to general unsecured creditors P171,000

Payment rate to general unsecured creditors(Including balance due to partially secured creditors)P171,000 / (P350,000 + (P120,000 - P90,000)) 45%

 Amounts to be paid to:

Fully secured creditors P 91,000Partially secured creditors [P90,000 + .45(P30,000)] 103,500Unsecured creditors with priority 30,000General unsecured creditors [.45(P350,000)] 157,500Total P382,000

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PROBLEM 6

Joseph. filed a voluntary bankruptcy petition on August 15, 2014, and the statement of affairs reflected thefollowing amounts:

EstimatedBook CurrentValue Value

 Assets Assets pledged with full secured creditors P 900,000 P1,110,000 Assets pledged with partially secured creditors 540,000 360,000Free assets 1,260,000 960,000Total P2,700,000 P2,430,000

LiabilitiesLiabilities with priority P 210,000Fully secured creditors 780,000Partially secured creditors 600,000Unsecured creditors 1,620,000Total P3,210,000

 Assume that the assets are converted to cash at the estimated current values and the business isliquidated. What amount of cash will be available to pay unsecured non-priority claims?

 A. 720,000B. 840,000C. 960,000D. 1,080,000

 Answer : D

Solution:

Estimated current values of assets pledged with fully securedcreditors P1,110,000 Add: Estimated current value of free assets 960,000Total P2,070,000Less Liabilities:

Full secured creditors P780,000With priority 210,000 990,000

Total cash available for unsecured claims P1,080,000