Answered: In a liquidation proceeding, if the…

In a liquidation proceeding, if the proceeds on the realization of an asset exceed the lien against that asset, the excess is assigned to

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter20: Corporations: Distributions In Complete Liquidation And An Overview Of Reorganizations

Section: Chapter Questions

Problem 2DQ

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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

In a liquidation proceeding, if the proceeds on the realization of an asset exceed the lien against that asset, the excess is assigned to
*
a. the holder of the lien.
b. meet the claims of the unsecured creditors.
c. the stockholders of the corporation.
d. other lien holders whose assets will not realize a sufficient amount to cover their liens.

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