Divvying Proceeds Between Creditors in Bankruptcy
Posted: Thu May 02, 2013 10:27 pm
I'm trying to figure out if my professor made a mistake because I don't know how she got the result in my notes.
Assets-
$30,000
Debts-
Unsecured-$80,000
Secured (unperfected)-$20,000
I have the secured creditor getting $6,000. The secured creditor losses a strong-arm challenge and is treated the same as the other creditors. Each creditor receives a pro-rata share of the 30,000. 20,000 is 1/5 of the total debt of 100,000. Therefore, the secured creditor gets 1/5 of 30,000.
The answer in my notes is that the secured creditor gets 30% of 30,000.
Assets-
$30,000
Debts-
Unsecured-$80,000
Secured (unperfected)-$20,000
I have the secured creditor getting $6,000. The secured creditor losses a strong-arm challenge and is treated the same as the other creditors. Each creditor receives a pro-rata share of the 30,000. 20,000 is 1/5 of the total debt of 100,000. Therefore, the secured creditor gets 1/5 of 30,000.
The answer in my notes is that the secured creditor gets 30% of 30,000.