Question
Bankruptcy Case Analysis the following case describes the company's bankruptcy payout. Answer each multiple choice question using this case. Besides being as on-air radio personality,
Bankruptcy Case Analysis
the following case describes the company's bankruptcy payout. Answer each multiple choice question using this case.
Besides being as on-air radio personality, Fraser runs a small business on the side called Crane's Wine Symposium. The business is doing well, but like lots of other small businesses it is having cash flow problems. Creditors are demanding payment and the bank refuses to lend the business any more money. The number of creditors is increasing and Fraser can see no way to pay them off.The next day, Fraser visited a bankruptcy office and made a voluntary assignment into bankruptcy. The trustee in bankruptcy realized the following amounts from the sale.
- AssetsCreditors' ClaimsBuilding$300 000First mortgage (building)$200 000shed$ 50 000Second mortgage (building)$ 175 000Car50 000Conditional sale agreement (shed) 30 000wine35 000Chattel mortgage
- on car 30 000
- Accts rec10 000Municipal taxes ($10,000/year)30 000Bank accounts5 000Rent ($5000/month)25 000Misc equipment15 000Trade creditors160 000Trade fixtures10 000register5 000
Total Assets:$480 000
Total Claims:$650 000
The expenses of liquidation were $1500.
The trustee's fee was $2000.
PAYOUT-Crane's Wine Symposium
- Total of liquidated assets:$480 000
- Less payments to secured creditors:
First mortgage (building)$200 000
Second mortgage (building)100 000
First mortgage (shed)30 000
Chattel mortgage on car30 000
Total:($360,000 )
- Less payments to preferred creditors:
Trustee$2 000
Municipal taxes$20 000
Rent$15 000
Liquidation Expense$1,500
Total:($38,500 )
Total left to pay general creditors$ 81,500
- Payments to general creditors:
Second mortgage (building)$75 000
Municipal taxes10 000
Rent20 000
Trade creditors160 000
Total:$255,000
Saved
The trustee fee is __________________
Question 29 options:
$4,000
one half of $1,000 as there are always two trustees per account
one half of $81,500 because the fee is split between the general creditors and trustees
$2,000
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