Corporate Liquidation Se CORPORATE LIQUIDATION Methods: Values Statement of Affairs ESTIMATES 12. Statement of Deficiency 3, Statement of Realization and Liquidation > ACTUAL Tae ‘Asset pledged to Fully Secured Liability (AP-FSL) x less: Fully Secured Liability (FSU) (xx) Excess: (considered as free assets) x Plus: Assets not pledged x Total Free Assets (TFA) * less: Total Unsecured Creditors with priority® (xx) Net Free Assets (NFA) x less: Total Unsecured Creditors without priority. xx) Estimated Deficiency to Unsecured Creditors (EDUC) x U Partially Secured Liability (PSL) Py Less: Assets Pledged to Partially Secured Liability (AP-PSU (o) Excess: (Considered as unsecured credits) * Plus: Liabilities not secured by any asset x Total Unsecured Creditors without priority x [Total Unsecured Creditors with priority* 1. Assessment, Taxes and Dues to Government 2. Compensation due to employees 3. Expenses incurred 6sCorporate Liquidation ————™|_—“_— } Statement of Deficiency Ganon festa xx_Increase in asset “ 1x Estimated Gross Gan 2 Loss Absorbed by stat ‘ois Absorbed by Unsecured Creditors xx en aka: EDUC under Statement of Affairs Statement of Realization and Liquidation ‘Notes payable issued on tanary 1, 2018s sacred by inventory and account nthe other hand, bonds payable issued on January is secured by and an bil oer asets are deemed as Fee asses, nest ete Corporate Liquidation ee PROBLEMA: The unseoured cect of Cub Figo Corporation fied a peltion on “nly 1 2018 to fore the said caporaton into barkugtey. On December 31, 2018, Cub Fino is now in the provess of preparing statement of afar as mandated by the. The aming valve ard esate a values fhe ase are as fous Carrying Value Fair Value cash 20.000 20000 ‘Account Receivable 46,000 30,000 inventory 35000 land 70000 Bulding 100,000 Equipment 80.000 TOTAL 335,000 Debts of Club Filipino are as follows: ‘Accounts paya Wages Payable (al have print) ‘Teves Payatle Noes Payable Interest on Notes Payable Bonds payable 150,000 Interest on Bonds payable 7.500 TOTAL 365,125 The common stock, PS par 327,000 + Estate Defi (Pav7.125) 1. How much is the Tota Free Assat (TFA)? A. 90375 & 112500 c. 120,500 ©. 170,000 67Corporate Liqu a 1 a Corporate Liquidation St NFA) ee us the nat ee 355 rary) 0. 50% | ‘5, Whatis the estimated recovery percentage fr unsecured ereitors with rity? A 100% B MI C. 15% 0. 50% 6. Whats the estimated recovery percentage for partially secured creditor? ‘A 100% Baroy C 15% D505 Accounts Payable Total Unsecured Credtors without priority *orate Liquidation cere ‘pecounts Payable “XEst Recovery % Coles as tid oes ‘Eslimated Deficiency fo Unsecured Creditors | (eouc) ee eee Extmated Recovery Peroeriage ean imeunsceons wen htop Ast Sven Tear nt Py | = A B Estimated 7 uy seweitiates | Towkrent — | Onsaring | Reson, | Stowe | & | woes Foe aly _| Peenage 120,000 Collection | soo | 125,500" Liability to be. zoom dea ' ERP P 130,000 ——-P 100,000 sse15 = ‘so papec Pacantoge for Unscued eretr ygy 1, Whats the stinaad sre assets conte ica a te estimated realizable ales, yy, 12 he as the ER for paral secured eredtors? A 10% Araataaitset ronson wou pty ‘x0 * Tucwo> | roy enctnstesemtey) 000 Unseowed Cris ___260,000 | TUCHOP 300,000 | Panay secured (prion secured)... P 60.000 210,000 | “ERP to unsecured who prioy = (180,000 + 300,00) = 60% "Banal secured credo = Asset pledged 60,000 + unsecured portion 000 x ERP of 0%) = 24000, or partialy secured is equal to 84% = 84,000 + 100,000 | TUOWP — Toa Unsecwzed Creditors With Pronty LTVOWOP=ToalenredCrediom Wine Phony Corporate Liquidation ee PROBLEM C: MARCON Co. has been undergoing iuiatin since January 1. As of March 31 condensed stalement of ealzaton and iquidaton is presented below. Assos 4,987,500 4,200,000, 13. Th net gain (loss forthe three-month period nding March 3 is ‘A P250,000 ‘Statement of Realization and Lig ‘Assets to be Realized abies to be Lquidated Assets Acquirod: Lables Assumed abies Liguidated: Assets Realized bites Not Liquidated Assets Not Realized Supplemental Charges Supplemental Credits TOTAL 13,237,500 | 13875000 | TOTAL r {637,500 | Net Balance: Gain Bcorporate Liquidation eee ee" | ad a bad a ory Certon Coat ck ROLE Syne 30,2017, he folowing infomation yet cased es aqile_—_— Cae Realized. nat | Assets OUT art eae 80,00) Awentory ‘oom Investentin equity secunty 26.409 | i a0 ‘Buiding e000) even 4800) sites ot iqutod z scat Ped 278000 NotsPayble 2000 saaresPayate 40900 TaesPayte* ‘00 Bank Loan 188,000 Dusrg te stron pti ending Devember 31,2017, the tus equity seu for 25,000; sold al ivertores on account ee 00 ote bark ian and al ables with prontes (salaries and taxes) a wel a? 70 fc esl adrian expense. 14 How much is the net gain or (oss) on realization and liquidation aso ‘7 ” Corporate Liquidation en suggested Solution: (B) Statement of Realization and Liquidation: (December 31,2017) AT BOOK VALUE Appr W240 | 758000 ‘obo iquideted ‘soon | 0 jes Assumed 186,400 | Assets Realized (BV); 400 Investment 28400 Avent 160000 iavidated: | 674000 | 436,000 | ‘Accounts payable-276,000 Noes payable: 234000 rato | 180000 | 1,548,300 [7.530400 | TOTAL 7990 NOTE The Asses WOT reazed wil become. the iabites to be hqiaed ned asas to be raized not pet pet “Bock Value method | roves thatthe sets | eaizod wil be ced at | took vate and any gin or recog in il rds or | charges. respecte 5iquidation ° aa ae obits ae 000 me | vnesmenr | Bark Loan -26,000 w r 26.000 saares- 40000 inventor: 150.009 Tasos Payale- 18000 ame igs | 14900 | 06000] ASH Not Reainpy . courts Recehati | cout payatie 27800 es aye 224000 Bak \2en dance | 198.000-26 000= 162.000 Equipment 48,000 supplemetlcrages: | 7500 |? ‘Supplomontal Credits: | cos-0 Cred Sales | vessonsse 9 | Expenses -7.500 Hora ¥35r 3 | 1370000 | TOTAL Net Balance: Loss 11900 NOTE: The Tanies WOT | NOTE: WOTE: The Asse nT) ligidated wil become the | shows realized wil become te) liabites to beIqutted rxt | hat the assets to be read ret eto Fai Vee petod oprah provides Fair Value approx tte same provides that the ais ‘nou ot realzed will be creed Net Loss Fair value or Proceeds. computed under the In this method, there 8m) fist need to recognize andr ateratve any gains of loses i whichis supplemental cedis_ “‘es (BED) | [Besinning Estat Deft | | +ttassy Gain on Reazaion __——} “re — | ‘st efit End 12302017 | Lies oT Leet tRewenoraeine | ‘TasnBaiee 1230007 es _Suggested soto: (A <1 50) hema eva ——~«* NR “436000 | 674.000 | Libilty to be Liguidated | 0 0 | Liabities Assumed | 000 \ I | | | Pact ot Stes and Taxes Saas Payabe- 000 | TesePopee 600 sth este deft end asf ne 8, 20187 L | ‘Cash ——~-58,000 ‘Payment of Administration Expense Expense - 7,500 ah 700Compose - ——eey Joint Arrangement and PFRS for SMEs —_[_[_—_—_—_ _£{*""_ ning ash balance 3 of June 20, 20189 tow much th ‘ato CHAPTER 3 (eg = JOINT ARRANGEMENT with SMEs “pasts NOT Realand —_— tan a } Joint Operation | = Joint Ventu | * PERS for SMEs: | > Jointly controlled op | > Jointly controlled assets 81