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Kimberly MacKenzie, president of Kim's Clothes Corporation, a medium-sized manufacturer of women's casual clothing, is worried. Her firm has been selling clothes to Russ Brothers department store for more than ten years, and she has never experienced any problems in collecting payment for the merchandise sold. Currently, Russ Brothers owes Kim's Clothes $65,000 for spring sportswear that was delivered to the store just two weeks ago. Kim's concern was brought about by an article that appeared in yesterday's Wall Street Journal that indicated that Russ Brother's was having serious financial problems. Further, the article stated that Russ Brothers' management was considering filing for reorganization, or even liquidation, with a federal bankruptcy court.

Assume that Russ Brothers did indeed fail, and that it had the attached balance sheet when it was liquidated (in millions of dollars).

For simplicity, assume that there were no trustee's fees or any other claims against the liquidation proceeds. Also, assume that the mortgage bonds are secured by the entire amount of fixed assets. What would each claimant receive from the liquidation distribution?

 

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9305715

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