What Would Be the Priority of the Claims as to the Distribution

question 4

Multiple Choice

What would be the priority of the claims as to the distribution of assets in a liquidation under Chapter 7 of the Bankruptcy Act?
1) Trustees' costs to administer and operate the firm.
2) Common stockholders.
3) General,or unsecured,creditors.
4) Secured creditors who have claim to the proceeds from the sale of a specific property pledged for a mortgage.
5) Taxes due to federal and state governments.

• A)1, 4, 3, 5, 2
• B)5, 4, 1, 3, 2
• C)4, 1, 5, 3, 2
• D)5, 1, 4, 2, 3
• E)1, 5, 4, 3, 2

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Definitions:

Potential Voting Rights

Voting rights that are not currently exercisable or convertible but could potentially give the holder control or significant influence over the decision-making of an entity.

Voting Rights

The rights of shareholders or members to vote on company or organizational matters, usually at meetings like annual general meetings.

Ledger Accounts

Record books or digital records in accounting that are used to store, organize, and summarize a company's financial transactions, sorted by account.