Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

  1. Total of liquidated assets:$480 000

  1. 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 )

  1. 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

  1. 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Law For Health Informatics And Information Management

Authors: Melanie Brodnik, LaurieRinehart-Thompson, Rebecca Reynolds

3rd Edition

9781584265306

More Books

Students also viewed these Law questions

Question

1. Eat lunch with a different group of students every day.

Answered: 1 week ago