Bankruptcy Liquidation Problem

Vandalay Industries has the following balance sheet:

Assets			Liabilities and Equity
Cash	$ 60		A/P	$1,580
A/R	1,200		N/P (Bank)	1040
Inventory	1,800		Accrued Taxes	250
Total Current	3,060		Accrued Wages	580
			Total Current	3,450
Equipment	2,500
Buildings	2,200		1st Mortgage Bonds	2,500
Land	2,480		2nd Mortgage Bonds	1,000
Total Fixed	7,180		Subordinated Debentures	1,730
			Total Liabilities	8,680
			Preferred Stock	360
			Common Stock	1,200
Total Assets	$10,240		Total Liabilities & Equity	$10,240

The debentures are subordinated to only the notes payable. Suppose the company goes bankrupt and is liquidated, receiving 50 cents on the dollar for inventory, $1,000 being received from A/R and cash at face value.

Fixed assets are liquidated for $3,300. The fixed assets served as collateral for the 1^st and 2^nd mortgage bonds. Trustees costs total $500

How much will each class of investor receive and what percentage of their original claim will they recover?

Priority of Claims in Liquidation
Proceeds from collateral	3300
Proceeds from other assets	2,880
	Collateralized Assets	Unsatisfied Claim	Other Assets	Unsatisfied Claim
Proceeds from sale of assets	1,200		2,880
1st Mortgage claim on collateral	900	0
2nd Mortgage claim on collateral	900	600
Administration			480	0
Wages Due			180	0
Taxes			180	0
Unfunded Pension Liabilities			0	0
Available to general creditors			2,040
General Creditor %		61.82%
Claims of General Creditors	Claim	Application of %	After Subordination Adjustment	Percentage of Original Claim Received
Unsatisfied portion of 1st Mortgage	0	0	0	100.00%
Unsatisfied portion of 2nd Mortgage	600	371	371	74.55%
Accounts Payable	1080	668	668	61.82%
Other (non-senior)	0	0	0	N/A
Senior Debt	540	334	540	100.00%
Subordinated Debt	1080	668	461	42.73%
Total	3,300	2,040	2,040
Equity Holders
Preferred Stock	360			0.00%
Common Equity	residual			0.00%