Managerial Finance

Da ?tobUr'\ JrL+-, )^ tlCeLDog Bankruptcy, Reorganization, anti Liquidation

b. After distribution to general crefitors and subordination adjustments are made, how much of the proceeds are received by the second-mortgage holders? By holders of the notes payable? By the subordinated debentures? By the common stockholders?

Chapter 24

Subordinated debentures

Total debt

Common equity

Total assets

The trustee's costs total $281,250, and the firm has no accrued taxes or wages. 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 $2.5 million is received from sale ofthe assets?

The Verbrugge Publishing Company's 2012 balance sheet and statement are as Reorganization follows (in miliions of dollars):

ce Sheet

Current

Intermediate Problenr 2

Southwestern Wear Inc. has the following balance sheet: Current assets Fixed assets

Net fixed Goodwill

$1,875,000 Accounts payabie 1,875,000 Notes payable

&,759,gqq Total liabilities and equity

$ 37s,000

750,000

750,000

$1,875,000

1,875,000

$ulgqqq

$+z 78

6

135

9

9

$168

153

15

Current

Advance

stock, $112.50 par value ,200,000 shares)

$10.50 preferred stoch no par, callable at $150 (60,000 shares)

Common stoch $1.50 par value shares)

Ret earnings

Total assets Total

Income S

Net

expense

operating income

income

EBT

Taxes (50%)

Net income

Dividends on $6 preferred

Dividends on $10.50 preferred

Income available to common stockholders

57

$33€$336

$540.0

516.0

$ 24.0 3.0

$ 27.0 13.5

$ l3.s 7.2

0.6

$_s3