Question details

Question 5. (20 points) Cambria, Inc. is being liquidated under Chapter 7 of the Bankruptcy Act.
$ 5.00
Name______________________________________
Answer A-E

 Question 5.  (20 points) Cambria, Inc. is being liquidated under Chapter 7 of the Bankruptcy Act.  Its current balance sheet is shown below.  Fixed assets are sold for $30,000,000 and current assets are sold for $10,000,000.  All fixed assets are pledged as collateral for all mortgage bonds.  Subordinated debentures are subordinate only to notes payable.  Trustee costs are $1,000,000.  No employee is owed over $2,000.

  Before     Before
  Default   Balance Sheet Default
Current Assets 45,000,000   Accounts payable            15,000,000
Net fixed assets  85,000,000   Accrued taxes                    10,000
      Accrued wages                  550,000
      Notes payable              3,800,000
        Total current liabilities            19,360,000
      First-mortgage bonds            18,000,000
      Second-mortgage bonds            25,000,000
      Debentures            45,000,000
      Subordinated debentures            14,000,000
      Common stock              2,500,000
      Retained earnings              6,140,000
Total assets      130,000,000                              -   Total claims          130,000,000

 

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?

 e.  How much will each of the general creditors receive after subordination adjustment?

 

Available solutions