At the time it defaulted on its interest payments and filed for bankruptcy, Balfor Corp. had the following balance sheet (in millions of dollars). The court, after trying unsuccessfully to reorganize the firm, decided that the only recourse was liquidation under Chapter 7. Sale of fixed assets, which were pledges as collateral to the mortgage bondholders, brought $750 million, while the current assets were sold for another $700 million. Thus, the total proceeds from the liquidation were $1,450 million. The trustees costs amounted to $1 million; no single worker was due more than the maximum allowable wages per worker, and there were no unfunded pension plan liabilities.

Current Assets 900

Accounts payable 90

Accrued taxes 100

Accrued wages 70

Notes Payable 250

Total current Liabilities 510

First-mortgage bonds*

700 Second-mortgage bonds* 300

Net Fixed Assets 1,200

Debentures 600

Subordinated debentures(1) 200

Common stock 100

Retained earnings (310)

Total assets 2,100

Total claims 2,100

* all fixed assets are pledged as collateral to the mortgage bonds (1) subordinated to notes payable

a. How much of the proceeds from the sale of assets remain to be distributed to general creditors after priority claimants?

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