Jake, a Businessman, Filed for Bankruptcy and Was Declared Insolvent

question 5

Multiple Choice

Jake, a businessman, filed for bankruptcy and was declared insolvent by the courts. He owed $15,000 each to two creditors and $5,000 each to two others. The courts also decreed that he should sell his house worth $30,000, to pay his debts. Which of the following is legally permissible in this scenario?

• A) Jake is entitled to sell his house and pay the creditors on a pro-rata basis.
• B) Jake is entitled to sell his house and pay whomsoever he chooses.
• C) Jake is entitled to sell his house and pay the creditors he owes the maximum amount of money to.
• D) Jake is entitled to sell his house and pay the creditors he owes the least amount of money to.

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Definitions:

Interest Income

The earnings received from investments in vehicles such as savings accounts, certificates of deposit, or bonds, typically presented as a percentage of the investment's total value.

Quantitative Measures

Numeric indicators or metrics used to evaluate, compare, and track performance or outcomes.

Managerial Success

Achieving organizational goals effectively and efficiently through planning, organizing, leading, and controlling resources.

Economic Resources

The land, labor, capital, and entrepreneurial ability that are used to produce goods and services. Also known as the factors of production.