If a Debtor Goes Bankrupt and Has More Than One

question 52

Multiple Choice

If a debtor goes bankrupt and has more than one secured creditors then:

• A) the creditor who secured the interest first gets the first right to reclaim the collateral.
• B) all secured creditors get equal shares in the collateral.
• C) the creditor who perfected the security interest first gets the first right to reclaim the collateral.
• D) the collateral is distributed among all the creditors with secured interest in the proportion of their credit.

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Definitions:

State Unemployment Tax

A tax levied by state governments on businesses to fund unemployment insurance benefits for workers who have lost their jobs.

Employee Withholding

The portion of an employee's wages deducted by the employer for taxes, social security, and other benefits, and paid directly to the government.

Warranty Expense

Costs a company incurs due to servicing or replacing products under warranty.