A statement of affairs presents an overview of a bankrupt entity’s assets, liabilities and expected return to creditors upon insolvency realization efforts.
Key Components:
- Lists all property owned and debts owed along with valuations
- Identifies funds available for distribution and estimated dividend percentages
- Incorporates liquidator’s remarks on affairs and compliance status
Example:
Liquidators prepared a statement of affairs for a failed construction firm detailing assets for sale and deficiency facing suppliers owed payment.
Takeaways:
Creditors rely on detailed statements to gauge return prospects. Debtors benefit from full disclosure enhancing legitimacy and fairness of resolutions. Regulators utilize statements to monitor compliance and impose penalties for deficiencies if needed.