Lone Star Enterprises, Inc. of Austin, Texas is facing liquidation. At the time Lone Star Enterprises defaulted on its interest payments and filed for bankruptcy, the firm had the balance sheet shown on the attachment (in thousands of dollars.) The court, after trying unsuccessfully to re-organize the firm, decided that the only recourse was liquidation under Chapter 7.

Sale of the fixed assets, which were pledged as collateral to the mortgage bondholders, were expected to yield two-thirds of their book value when sold. The current assets were expected to sell for 50% of their book value. The following information is also known about Lone Star Enterprises liquidation: 1) The Trustees costs for work during the liquidation amounted to $50,000.

2) No single worker was due more than $2,000 in wages.

3) There were no unfunded pension plan liabilities.

Based on the above information and the attached balance sheet for Lone Star Enterprises, please answer the following questions:

1) What will be the total value realized when Lone Stars assets (both Current Assets and Fixed Assets) are liquidated?

2) What is the total value of the claims held by creditors of Lone Star, including claims listed on the firms balance sheet, as well as trustee fees?

3) What portion or percentage of the creditors claims will be funded by the liquidation of Lone Stars total assets, on an overall basis?

4) Will Lone Stars common shareholders receive any proceeds from the liquidation of the firms total assets? Why or why not?

5) At the time of its liquidation, is Lone Star Enterprises insolvent? Why or why not?

	LONE STAR ENTERPRISES, INC.
	Balance Sheet As of December 31, 2016
	(Dollars in Thousands)
		-------------2016----------------
		DOLLARS	% OF ASSETS
ASSETS:
Current Assets		400	40.00%
Net Fixed Assets		600	60.00%
TOTAL ASSETS		1,000	100.00%
LIABILITIES AND EQUITY:
Accounts Payable		50	5.00%
Accrued Taxes		40	4.00%
Accrued Wages		30	3.00%
Notes Payable		180	18.00%
Total Current Liabilities		300	30.00%
Mortgage Bonds		500	50.00%
Subordinated Debenture Bonds		300	30.00%
TOTAL LIABILITIES		1,100	110.00%
Common Stock		50	5.00%
Retained Earnings		-150	-15.00%
TOTAL STOCKHOLDERS' EQUITY		-100	-10.00%
TOTAL LIABILITIES AND EQUITY		1,000	100.00%