Question
Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force
Oregon Corporation has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Reform Act. Its creditors are considering an attempt to force liquidation. The company currently holds cash of $28,000 and accounts receivable of $47,000. In addition, the company owns four plots of land. The first two (labeled A and B) cost $30,000 each. Plots C and D cost the company $42,000 and $47,000, respectively. A mortgage lien is attached to each parcel of land as security for four different notes payable of $37,000 each. Presently, the land can be sold for the following:
Plot A | $ | 38,000 |
Plot B | $ | 33,000 |
Plot C | $ | 36,000 |
Plot D | $ | 71,000 |
Another $42,000 note payable is unsecured. Accounts payable at this time total $76,000. Of this amount, $23,000 is salary owed to the company's workers. No employee is due more than $5,600.
The company expects to collect $34,000 from the accounts receivable if liquidation becomes necessary. Administrative expenses required for liquidation are anticipated to be $68,000.
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Prepare a statement of financial affairs for Oregon Corporation.
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If the company is liquidated, how much cash would be paid on the note payable secured by plot B?
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If the company is liquidated, how much cash would be paid on the unsecured note payable?
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If the company is liquidated and plot D is sold for $76,000, how much cash would be paid on the note payable secured by plot B?
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