Distribution of liquidating value


Problem: When the Beacon Computer Company filed for bankruptcy under Chapter of the U.S. Bankruptcy Code, it had the following balance sheet information:

Liquidating Value Claims
Trade Credit                                 $3000
Secured mortgage notes                $6000
Senior debentures                         $5000
Junior debentures                          $9000
Total Assets $15,500 Book Equity   -$7500

Assuming there are no legal fees associated with the bankruptcy, as trustee, what distribution of liquidating value do you propose?

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Finance Basics: Distribution of liquidating value
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