Question

poor sarah! john has died and she no longer wishes to continue with their custom cabinet business, sj cabinets. john made the cabinets, after all! she wants to sell off all of their assets and inventory instead of selling the business itself. what method would most likely be used to estimate the value of sj cabinets?

Answer 1

The method more likely to be used to estimate the value of SJ cabinets is liquidation analysis.

What is liquidation analysis?

Liquidation analysis represents the worst-case scenario and assumes the assets of the debtor are sold separately, as opposed to the debtor attempting to turn itself around through restructuring or being sold in its entirety as a going concern to a buyer.

The decision to liquidate is made under the belief that creditor recoveries would be higher if a court-appointed trustee is placed in charge of the liquidation and distribution of the sale proceeds.

Liquidation Analysis means the analysis of the assets and liabilities of the Debtor which determines the Liquidation Value of the Debtor’s Property.

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