Tundra Tots is being liquidated under Chapter 7 of the Bankruptcy Act. Its current balance sheet is shown below. Fixed assets are sold for $25,000,000 and current assets are sold for $18,000,000. All fixed assets are pledged as collateral for all mortgage bonds. Subordinated debentures are subordinate only to notes payable. Trustee costs are $500,000. No employee is owed over $2,000.

Session 9 5 Question 5. (20 points) Tundra Tots is being liquidated under Chapter 7 of the Bankruptcy Act. Its 7 current balance sheet is shown below. Fixed assets are sold for $25,000,000 and current assets are sold for $18,000,000. All fixed assets are pledged as collateral for all mortgage bonds. Subordinated debentures are subordinate only to notes payable. Trustee costs are $500,000. No employee is owed over $2,000. 3 4 5 Sale of current assets Sale of fixed assets Trustee costs 18 000 000 25 000 000 500 000 Before Default 75 000 000 50 000 000 Before Default Balance Sheet 9 Current Assets 0 Net fixed assets Accounts payable Accrued taxes Accrued wages Notes pavable Total current liabilitie First-mortgage bonds Second-mortgage bonds Debentures Subordinated debenture Common stock Retained earnings Total claims 15 000 000 10 000 550 000 3 800 000 19 360 000 18 000 000 20 000 000 45 000 000 14 000 000 2 500 000 6 140 000 125 000 000 0 Total assets 125 000 000 4 a. How much ill SHs receive? b. How much will mortgage bondholders receive? c. How much will prior ity creditors receive? d. Identify the remaining general creditors. How much will each receive before subordination 8 adjustment? e. How much will each of the general creditors receive after subordination 2 adjustment