Buggy Whip Industries Is Being Liquidated Under Chapter 7 of the Bankruptcy

question 28

Multiple Choice

Buggy Whip Industries is being liquidated under Chapter 7 of the bankruptcy code.When it filed for bankruptcy, its balance sheet was a follows:


**Mortgage bonds are secured by land and buildings
Assume that the liquidation is a voluntary petition, that no unpaid contributions to employee benefit plans exist, and that no customer layaway deposits are involved.The proceeds from the liquidation of the company's assets are as follows:

Bankruptcy administration charges are $2,500,000.Determine the amount that the mortgage bondholders will receive in this liquidation.

• A)$5,000,000
• B)$6,500,000
• C)$8,000,000
• D)$10,500,000

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