Parent corporation owns all of subsidiary corporations stock in addition parent corporation owns $100,000 of subsidiary corporation's bonds. When subsidiary corporation is completely liquidated

Question

Steve Cardenas

Business

25 July, 01:29

Parent corporation owns all of subsidiary corporations stock in addition parent corporation owns $100,000 of subsidiary corporation's bonds. When subsidiary corporation is completely liquidated

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Answers (1)

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Ivan Goodwin · Answer 1

In this case, when the subsidiary corporation is completely liquidated they have to pay the $100,000 in the subsidiary corporation's bonds.

Explanation:

The reason behind this answer is that in case the subsidiary corporations decide to liquidate all of their assets in any case. They still have a debt to the parent corporation of $100,000. So, after they liquidate they have to take some of the money to pay the debt issued of those bonds. No matter what, or the parent company can write a lawsuit against them for not doing so.