Suppose the business has total assets worth Rs. 450,000/- and total liabilities of Rs. 800,000/-.
Mr. Ali has the personal property of Rs. 200,000/- and Mr. Yasir has the personal property of
Rs. 125,000/-. In case the business is liquidated and declared as bankrupt, up to what extent
Mr. Ali & Mr. Yasir will pay from their personal property to satisfy the creditors’ claim? You
are also required to discuss the possible treatments if any of them is unable to pay from
personal property
Nothing
To determine how much Mr. Ali and Mr. Yasir will have to pay from their personal property to satisfy the creditors' claim, we need to calculate their respective contributions based on the business's total assets and liabilities.
First, let's calculate the business's net worth, which is the difference between total assets and total liabilities:
Net Worth = Total Assets - Total Liabilities
Net Worth = Rs. 450,000 - Rs. 800,000
Net Worth = - Rs. 350,000
From the calculation, we can see that the business has negative net worth, indicating insolvency. In this scenario, the contributions from Mr. Ali and Mr. Yasir will depend on the laws and regulations of the specific jurisdiction where the business is located. It would be best to consult a legal professional to determine the exact obligations and liabilities in such a situation.
However, if we assume that Mr. Ali and Mr. Yasir are fully responsible for the business's debts, they might need to contribute to repay these debts. We can calculate their contributions based on the proportion of their personal property to the total assets.
Mr. Ali's Contribution = (Mr. Ali's Personal Property / Total Assets) * Total Liabilities
Mr. Ali's Contribution = (Rs. 200,000 / Rs. 450,000) * Rs. 800,000
Mr. Ali's Contribution = 0.444 * Rs. 800,000
Mr. Ali's Contribution = Rs. 355,556
Mr. Yasir's Contribution = (Mr. Yasir's Personal Property / Total Assets) * Total Liabilities
Mr. Yasir's Contribution = (Rs. 125,000 / Rs. 450,000) * Rs. 800,000
Mr. Yasir's Contribution = 0.278 * Rs. 800,000
Mr. Yasir's Contribution = Rs. 222,222
Therefore, if Mr. Ali and Mr. Yasir are fully responsible for the business's debts, Mr. Ali would contribute Rs. 355,556 and Mr. Yasir would contribute Rs. 222,222 from their personal property to satisfy the creditors' claim. However, as mentioned earlier, the actual obligations and liabilities may vary depending on the applicable legal framework.
If either Mr. Ali or Mr. Yasir is unable to pay from their personal property, various treatments might be possible. Some options include negotiating payment plans with the creditors, selling additional assets to cover the debts, or considering bankruptcy proceedings as a last resort. The specific treatments will depend on the jurisdiction and legal options available, and it is advisable to consult with a legal professional in such cases.