A is corrent. When distributing the assets of the debtor’s estate, the trustee must follow priorities prescribed by bankruptcy law. In this case the first $5,000 of the remaining assets would be paid to Noll Co. since secured creditors have first priority concerning the property acting as their collateral. The next $25,000 would be paid to the trustee ($15,000) and attorneys ($10,000) because administrative costs are first priority among unsecured creditors. Next, $20,000 of the remaining $20,800 ($50,800 - $5,000 - $25,000) would be distributed to claims arising in the ordinary course of the debtor’s business after the involuntary bankruptcy petition is filed but before the order for relief is entered, a gap creditor. Since Dart Corp. is the only remaining creditor which falls into this category, it will be paid the full $20,000 owed it, leaving $800 ($20,800 - $20,000). Of the remaining creditors, Boyd is given a higher priority since consumers’ deposits for undelivered goods or services (subject to a limit per individual) is given a higher priority than general, unsecured creditors. Thus, Boyd will receive the remaining $800.
B is incorrect. When distributing the assets of the debtor’s estate, the trustee must follow priorities prescribed by bankruptcy law. In this case the first $5,000 of the remaining assets would be paid to Noll Co. since secured creditors have first priority concerning the property acting as their collateral. The next $25,000 would be paid to the trustee ($15,000) and attorneys ($10,000) because administrative costs are first priority among unsecured creditors. Next, $20,000 of the remaining $20,800 ($50,800 - $5,000 - $25,000) would be distributed to claims arising in the ordinary course of the debtor’s business after the involuntary bankruptcy petition is filed but before the order for relief is entered, a gap creditor. Since Dart Corp. is the only remaining creditor which falls into this category, it will be paid the full $20,000 owed it, leaving $800 ($20,800 - $20,000). Of the remaining creditors, Boyd is given a higher priority since consumers’ deposits for undelivered goods or services (suibject to a limit per individual) is given a higher priority than general, unsecured creditors. Thus, Boyd will receive the remaining $800.
C is incorrect. When distributing the assets of the debtor’s estate, the trustee must follow priorities prescribed by bankruptcy law. In this case the first $5,000 of the remaining assets would be paid to Noll Co. since secured creditors have first priority concerning the property acting as their collateral. The next $25,000 would be paid to the trustee ($15,000) and attorneys ($10,000) because administrative costs are first priority among unsecured creditors. Next, $20,000 of the remaining $20,800 ($50,800 - $5,000 - $25,000) would be distributed to claims arising in the ordinary course of the debtor’s business after the involuntary bankruptcy petition is filed but before the order for relief is entered, a gap creditor. Since Dart Corp. is the only remaining creditor which falls into this category, it will be paid the full $20,000 owed it, leaving $800 ($20,800 - $20,000). Of the remaining creditors, Boyd is given a higher priority since consumers’ deposits for undelivered goods or services (suibject to a limit per individual) is given a higher priority than general, unsecured creditors. Thus, Boyd will receive the remaining $800.
D is incorrect. When distributing the assets of the debtor’s estate, the trustee must follow priorities prescribed by bankruptcy law. In this case the first $5,000 of the remaining assets would be paid to Noll Co. since secured creditors have first priority concerning the property acting as their collateral. The next $25,000 would be paid to the trustee ($15,000) and attorneys ($10,000) because administrative costs are first priority among unsecured creditors. Next, $20,000 of the remaining $20,800 ($50,800 - $5,000 - $25,000) would be distributed to claims arising in the ordinary course of the debtor’s business after the involuntary bankruptcy petition is filed but before the order for relief is entered, a gap creditor. Since Dart Corp. is the only remaining creditor which falls into this category, it will be paid the full $20,000 owed it, leaving $800 ($20,800 - $20,000). Of the remaining creditors, Boyd is given a higher priority since consumers’ deposits for undelivered goods or services (suibject to a limit per individual) is given a higher priority than general, unsecured creditors. Thus, Boyd will receive the remaining $800.
|
