Page 105 - Bankruptcy Volume 1

quate records of a financially distressed debtor. Honest mistakes in disclosure do not result in liability
under non-bankruptcy law for soliciting acceptances (or rejections) of a plan or for offering securities
under it. Accountants wishing to perform future auditing services to a reorganized debtor should be con-
scious of the fact that certain bankruptcy-related services could impair their independence with respect
to the debtor.

EXHIBIT 2

XYZ Company, Inc.
Liquidation Analysis

Pre-Effective Liquidation Post-Effective Date
Date Value Adjustment Value
Assets
Cash $ 2,000,000 $ — $ 2,000,000
Accounts receivable

Less than 45 days outstanding 200,000 (100,000) 100,000
46 to 120 days outstanding 100,000 (80,000) 20,000
Greater than 120 day outstand- 50,000 (45,000) 5,000
ing
Total accounts receivable 350,000 (225,000) 125,000

Inventory
Finished goods 200,000 (160,000) 40,000
Work in progress 100,000 (95,000) 5,000
Spare parts 25,000 (23,700) 1,250
Raw materials 75,000 (71,250) 3,750

Total inventory 400,000 (350,000) 50,000
Machinery and equipment
Industrial equipment 300,000 (270,000) 30,000

Computer equipment 75,000 (67,500) 7,500
Leasehold improvements 75,000 (67,500) 7,500
Office equipment and furni- 50,000 (45,000) 5,000
ture
Total machinery and equipment 500,000 (450,000) 50,000
Intangible assets — patent 50,000 (25,000) 25,000

Total asset liquidation value $ 3,300,000 $(1,050,000) $ 2,250,000
Less
Administrative claims and trustee (250,000)
fees under Chapter 7 proceedings
Amount available for secured cred- $ 2,000,000
itors
Senior secured claims $ 2,500,000

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