ACCA Strategic Professional · Advanced Financial Management · Business re-organisation
Zeta Co has assets that would realise $12m in liquidation. Liquidation costs would be $1m. Secured creditors are owed $6m. Unsecured creditors are owed $10m. Ignoring preferential creditors and tax, what would unsecured creditors receive per $1 owed in liquidation?
Unsecured creditors would receive $0.50 per $1 owed. Net liquidation proceeds are $11m after $1m costs, secured creditors take $6m, and the remaining $5m is shared across $10m of unsecured claims.
- A$0.50Correct
- B$0.60
- C$0.40
- D$1.10
Explanation
Net realisations are $12m less $1m costs, which is $11m. Secured creditors take $6m, leaving $5m. Dividing by unsecured claims of $10m gives $0.50. The $0.60 option ignores the liquidation costs, since $6m/$10m is $0.60.
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