Far East Energy Corp. (fka FEECQ)

[LouisDesyjr]

How the assets will be distributed for FEECQ

Part 2

Here is how the case will be done and the assets will be distributed in this Chapter 7 bankruptcy case.

The classes. The Summary of Schedules shows us that there are three classes of liabilities, plus there will a clas for the common shares; so there are a total of four classes in the case.

The classes, in order of priority, from highest to lowest along with amounts:

1: Secured Debt $112 million
2: Unsecured Priority claims $2.5 million (This would be things like taxes or payroll withholding, while an unsecured debt, it has priority over other unsecured liabilities)
3: Unsecured claims non priority - $14.5 million (Usually vendors)
4: Common shares - The common stock FEECQ, whatever is left over


Against the liabilities are the assets in the amount of $77.8 million.

Now we assign the assets to liabilities. The assets of $77 million are not enough to pay off the secured debt of $112 million, so all of the assets go to the secured debt; leaving nothing for the unsecured claims, meaning there is nothing for the common shares.

Once the assets are distributed and the case closed, the shares will stop trading once the market maker receives word of the case ending.

There will be no payout for the common shares.

Louis J. Desy Jr.

As one technical point on the secured liabilities. They get the value of the asset that the debt was secured by, and then if not enough to satisfy the liability the remainder becomes part of the unsecured claims. Because of this mechanic on how the distribution of assets is done, it is possible that the unsecured liabilities will recover something, but does not matter for our discussion here for the common shares, since there is not enough to pay all of the liabilities off.








Louis J. Desy Jr.