Why Is a Bailor Better Off on the Insolvency of Its

question 38

Essay

Why is a bailor better off on the insolvency of its bailee than a creditor on the insolvency of its debtor?

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Definitions:

Bad Debts

Amounts owed to a company that are written off as uncollectible, typically from customers who fail to pay their invoices.

Credit Policy Relaxation

The act of making a company's criteria for extending credit more lenient, aiming to boost sales at the risk of higher bad debts.

Accounts Receivable

Unpaid dues from customers to a company for goods or services already delivered.

Zero Balance Accounts

A checking account in which a balance of zero is maintained by automatically transferring funds from a master account in an amount only large enough to cover checks presented.