Regarding Priority Claims

question 11

Multiple Choice

Regarding priority claims:

• A) each claimant in a priority class shares pro rata if the assets cannot satisfy all claims in the class.
• B) employees have a priority for contributions to employee benefit plans but only to the extent that the $4,500 cap for unpaid wages has not been reached.
• C) subordination agreements are not enforceable.
• D) All of the above.
• E) Both (a) and (c) are correct.

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Definitions:

Zero Balance Account

A zero balance account is a type of bank account that maintains a balance of zero dollars by automatically transferring funds from a master account in the exact amount of transactions clearing the account.

Line of Credit

A flexible loan from a bank or financial institution, where a borrower can access funds up to a specified limit at any time.

Lockbox System

A service provided by banks to process payments quickly by allowing companies to have their customers send payments to a special post office box.