A tool manufacturing company, Mississippi Tools Inc., went bankrupt and the Court appointed a Licensed Insolvency Trustee to liquidate the estate of the bankrupt company. The Trustee has taken the necessary steps to identify the assets of the corporation, take control and possession of them, and value them. He has also identified all of the creditors and has ascertained the amounts owed to each of them. Note that the commercial lease agreement includes a provision that entitles the Landlord to three months accelerated rent in the event of default. The Trustee's report to the Inspector is set out below. The Trustee also reported that the liquidation expenses were $4,000 and his fees were $6,000 and the Superintendent's levy was $5,000.

ASSETS

Cash in bank.............................................................................................$ 5,000

Accounts receivable..................................................................................20,000

Inventories of finished product..............................................................60,000 Packaging Machinery.............................................................................160,000

Land..........................................................................................................140,000

Total value of assets.............................................................. $ 385,000

LIABILITIES

Jordan Bank (secured by first mortgage on land)..........................$ 100,000

Accounts Payable.................................................................................. 270,000

Municipal taxes payable (3 years in arrears).................................. 45,000

River Trust Inc. (secured by second mortgage on land)................. 100,000

Landlord (rent of $5,000 a month - arrears 6 months).................... 30,000

SD Bank (secured by chattel mortgage on equipment)................... 50,000 Total value of liabilities..................................................................$ 595,000

Read the fact situation set out above and do the following:

a. Complete the bankruptcy distribution calculation. In particular, name the creditors in the order in which they will be paid by the Trustee and the amount they will each receive. Show your work.

order of priority goes as follows

1.Funeral expenses in the case of a deceased bankrupt;

2.Trustee's fees and expenses;

3.Bankruptcy Superintendent's levy;

4.Wages - amounts up to six months' wages not to exceed $2000 per person that are not already covered as a secured creditor;

5.Spousal and child support arrears- any lump sums owing and up to one year's periodic payments;

6.Municipal taxes - up to two years;

7.Rent - up to three months' arrears + 3 months accelerated rent if the lease provides for it;

8.Costs of the first creditor to initiate the bankruptcy proceedings;

9.Worker's compensation payments;

10.All government payroll deductions

please utilize the following chart

			Value of Assets
	Amount Owed	Amount Paid
Secured Creditors:
Preferred Creditors:
General Creditors:

Answer rating: 100% (QA)

ANSWER To complete the bankruptcy distribution calculation well follow the order of priority as specified and use the information provided in the fact ... View the full answer