Liquidation Analysis (Attachment 4)

LIQUIDATION ANALYSIS, A Liquidation Analysis in Chapter 12 bankruptcy is a financial analysis that estimates the amount of money that would be generated if the debtor's assets were sold off and the proceeds were distributed to the creditors. The liquidation analysis is conducted to determine whether the proposed reorganization plan is feasible and whether it is likely to provide creditors with at least as much money as they would receive if the debtor's assets were liquidated. In Chapter 12 bankruptcy, the debtor is typically required to propose a plan of reorganization that outlines how they intend to repay their creditors over a period of time. The plan must demonstrate that the debtor has sufficient income and assets to make the proposed payments. If the plan is not feasible, the bankruptcy court may dismiss the case or convert it to a Chapter 7 liquidation. To conduct a liquidation analysis, the debtor's assets are typically valued at their fair market value, and the estimated costs of liquidating the assets are deducted. The resulting amount is then compared to the total amount of the debtor's outstanding debt. If the estimated amount of money that would be generated through liquidation is less than the total amount of the debtor's outstanding debt, the proposed reorganization plan may be considered unfeasible, and the bankruptcy court may reject it. www.FormsWorkflow.com