Calculate distributions to secured and unsecured creditors

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Task to be done:

Answering template (Use this to template to input values):

Here is the background information on your task The distribution of remaining funds in any administration activity must be based on priority (refer to section 556 of the Corporations act 2001). Priority is determined by the type of security creditors have over the company being wound up. We have consolidated all the proceeds from the sale of the Company assets and are preparing to pay a distribution to creditors. The assets identified in the previous task were sold for the following amounts (net sale proceeds): Semi-Trailer Fleet (x6): $1,500,000 Trailers (x10): $850,000 Trade debtors: $50,000 Fuel store (20,000L): $24,000 Office Fitout: $10,000 Generators (x3): $4,500 Coffee machine: $1,500 Fridge: $300 Total: $2,440,300 It was identified during the recovery of the assets, that a secured creditor (The Bank Australia) holds a PPSR registration against all 6 prime movers. As a secured creditor, they are entitled to all the proceeds from the sale of these prime movers, up to the value of their outstanding debt. Their debt is $2,000,000. Unfortunately for The Bank Australia, each prime mover was commercially sold with a consolidated value of $1,500,000, leaving a $500,000 shortfall. Additionally, in completing the winding up of the transport division, the Administrators have accrued remuneration totalling $150,000. The subsidiary has no employees so there are no employee claims. The Administrators have requested that creditors must now submit their final claims and have received the following final claims from unsecured creditors: ML Labour Hire: $435,000 ABC Labour Hire: $150,000 RTS Truck Maintenance Services: $90,000 JB-HI-FI: $4,000 KTAS: $9,000 Aus Catering: $1,800 Director's unsecured loan: $120,000 Total: $821,800 Here is your task As you are aware, we are assisting IDC in winding up their transport business, IDC Logistics, and have now consolidated all the funds from the sale of the Company assets and are ready to pay a dividend to creditors. At this stage of the project, we will need you to provide notice to the unsecured creditors of their dividend or distribution from sale of the company assets. In preparing a dividend to unsecured creditors, there are two key considerations in calculating the dividend amount: 1. Administrator's remuneration: The Administrators have remuneration outstanding of $150,000. Administrators remuneration is taken from the pool of funds prior to any secured/unsecured creditors. 2. Secured Creditor: The Bank Australia has received a secured creditor payment totalling $1,500,000. They have a remaining debt of $500,000. The shortfall of $500,000 will become an unsecured claim. Based on the treatment of the two items above, you will now be required to prepare a calculation to work out the following: 1. The cents per dollar available to unsecured creditors 2. The amount to be paid to each of the unsecured creditors A template has been provided to help you do this, simply work through the steps in the calculation sheet to complete the task. Recovered Assets Available for Unsecured Creditors Notes Assets Prime Movers (x6) Trailers (x10) Trade Debtors Fuel store (20,000L) Office Fitout Generators (x3) Coffee machine Fridge Administrators Remuneration Funds available for Unsecured Creditors Total Unsecured Creditors Dividend Return (Cents Per Dollar) sallall