MINI CASE: ENDCO, INC.

Endco is a wireless solutions provider that facilitates wireless Internet access through small remote devices that connect to portable computers. During the past several years, Endco was lavished with an abundance of equity financial capital from a variety of venture investors. Although initial adoption rates for this new service were far below expectations, most were confident that expanding the service area and thus increasing the service's availability to new and existing users would result in rapid increases in the volume of new subscribers. Helping to fund this massive expansion, Endco arranged tremendous amounts of debt financing, much of which was secured by the expansion assets themselves (i.e. wireless towers and transmission facilities).However, recently it became clear that Endco would not be profitable and would only continue to burn large amounts of cash if it continued to operate. Using the financial data provided, answer the following questions regarding Endco's Chapter 7 bankruptcy liquidation.

Administrative and legal fees are $370,000, and the bank underwriting the notes payable have the "right of offset" on cash deposits, the amount indicated in the cash account on the balance sheet.

Balance Sheet ($ Millions)
Assets			Liquidation Receipts
Cash	$2.4		$2.4
Inventory	16.0		5.0
Accounts Receivable	5.6		3.0
Net Plant	200.0		165.0
Net Equipment	100.0		57.0
Total Assets	$324.0		$232.4
Liabilities & Equity
Accounts Payable	$3.5
Notes Payable (12% Bank Loan)	29.0
Accrued Liabilities (Wages & Taxes)	1.5
Long-Term Mortgage Loans (12%, 10 years)	140.0
Long-Term Subordinated Loans (14%, 15 years)	80.0
Debentures (Subordinated to Notes Payable)	20.0
Preferred Stock	300.0
Common Stock	100.0
Retained Earnings	-350.0
Total Liabilities	$324.0

Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0Balance Sheet ($ Millions) Liquidation Assets Receipts Cash $2.4 $2.4 Inventory 16.0 5.0 Accounts Receivable 5.6 3.0 Net Plant 200.0 165.0 Net Equipment 100.0 57.0 Total Assets $324.0 $232.4 Liabilities & Equity Accounts Payable $3.5 Notes Payable (12% Bank Loan) 29.0 Accrued Liabilities (Wages & Taxes) 1.5 Long-Term Mortgage Loans (12%, 10 years) 140.0 Long-Term Subordinated Loans (14%, 15 years) 80.0 Debentures (Subordinated to Notes Payable) 20.0 Preferred Stock 300.0 Common Stock 100.0 Retained Earnings -350.0 Total Liabilities $324.0