Exam 18: Corporate Liquidations and Reorganizations

When the bankruptcy court grants an order for relief under Chapter 7,

Gonne Corporation is being liquidated under Chapter 7 of the Bankruptcy Act.The trustee has determined that the unsecured claims will receive $.35 on the dollar.Odemay Corporation holds a $100,000 mortgage note receivable from Gonne that is secured by equipment with a $120,000 book value and a $75,000 fair value. Required: How much of the mortgage receivable will be recovered by Odemay?

Pasten Corporation is liquidating under Chapter 7 of the Bankruptcy Act.The accounts of Pasten at the time of filing are summarized as follows: The land and building are pledged as security for the mortgage payable as well as any accrued interest on the mortgage.Wages and salaries were earned within 90 days of filing the bankruptcy petition and do not exceed $10,000 per employee.Liquidation expenses are expected to be $35,000. Required: 1.Prepare a schedule showing the priority rankings of the creditors and the expected payouts. 2.Yuomi Corporation was a supplier to Pasten Corporation and at the time of Pasten's bankruptcy filing,Yuomi's account receivable from Pasten was $500,000.On the basis of the estimates,how much can Yuomi expect to receive?

In a liquidation under Chapter 7,the trustee

Oceana Corporation is being liquidated under Chapter 7 of the Bankruptcy Act.The trustee has determined that the unsecured claims will receive $.35 on the dollar.Loans-R-Us holds a $1,000,000 mortgage note receivable from Oceana that is secured by building and equipment with a $1,200,000 book value and a $900,000 fair value. Required: How much of the mortgage receivable will Loans-R-Us recover?

Fresh-start reporting results in

The duties of a debtor in possession in a Chapter 11 bankruptcy case do not include

Lesher Corporation lost their primary contract and entered into voluntary Chapter 7 bankruptcy in the early part of 2014.By July 1,all assets were converted into cash,the secured creditors were paid,and $124,500 in cash was left to pay the remaining claims as follows: Required: Classify the claims by their Chapter 7 priority ranking,and analyze which amounts will be paid and which amounts will be written off.

Gargantuan Bank has loaned money in two separate loans to Little Company,which is now in Chapter 7 bankruptcy.Little Company has the following assets and liabilities,stated at fair value in liquidation. Required: Determine the amount of cash that Gargantuan will collect from these two pieces of debt.

In a Chapter 11 case,the debtor corporation filing the petition may continue in possession of the corporation's property,and is referred to as a(n)

Rank the following claims 1 through 5,with 1 being the first priority claim,under Chapter 7 of the bankruptcy code. ________ A.Trustee fees for administration of the estate. ________ B.Accounts payable for goods delivered prior to filing an involuntary petition for bankruptcy ________ C.Customer deposits for services never rendered. ________ D.First mortgage on the company's real estate. ________ E.Income taxes owed for the prior year.

A petition commencing a case against a corporate debtor

Which of the following must approve a Chapter 11 plan?

A primary difference between voluntary and involuntary bankruptcy petitions is that

A bankruptcy petition filed by a firm's creditors is

A single creditor

CommTex Corporation is liquidating under Chapter 7 of the Bankruptcy Act.The accounts of CommTex at the time of filing are summarized as follows: The land and building are pledged as security for the mortgage payable as well as any accrued interest on the mortgage.The note payable is secured with the equipment,but the interest on the note is unsecured.Wages and salaries were earned within 90 days of filing the petition for bankruptcy and pension plan contributions relate to services rendered within 6 months of filing the petition for bankruptcy;neither exceeds $4,000 per employee.Liquidation expenses are expected to be $40,000. Required: 1.Prepare a schedule showing the priority rankings of the creditors and the expected payouts. 2.Devendor Corporation was a supplier to CommTex Corporation and at the time of CommTex's bankruptcy filing,Devendor's account receivable from CommTex was $25,000.On the basis of the estimates,how much can Devendor expect to receive?

Kline Corporation incurred major losses in 2014 and entered into voluntary Chapter 7 bankruptcy in the early part of 2015.By July 1,all assets were converted into cash,the secured creditors were paid,and $122,700 in cash was left to pay the remaining claims as follows: Required: Classify the claims by their Chapter 7 priority ranking,and analyze which amounts will be paid and which amounts will be written off.