The Priority of Claims Established by Chapter Seven of the Bankruptcy

question 152

Multiple Choice

The priority of claims established by Chapter Seven of the Bankruptcy Reform Act of 1978 gives priority to claims of

• A) unsecured creditors over claims of secured creditors.
• B) preferred stockholders over claims of unsecured creditors.
• C) wages payable over claims of unsecured creditors.
• D) farmers in grain storage over expenses of administering the bankruptcy.

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Definitions:

Negotiable Instrument

A signed document containing an unconditional promise or order to pay a specified sum of money to a designated person or to the bearer of the document.

Maker

In terms of financial instruments like checks or promissory notes, the maker is the party that promises to pay a certain amount of money.

Bearer

A person who is in possession of a negotiable instrument that is payable to the “bearer” or “cash” or that has been indorsed in blank.

Indorses

To sign the back of a financial document, transferring interest or rights to another party.