[Topsya]

Hey guys!

Could you please help me with the following question:

Which of the following types of claims would be paid first in the distribution of bankruptcy estate under the liquidation provisions of Chapter 7 of the Federal Bankruptcy Code if the petition was filed July 15, 20X3?

a. A secured debt properly perfected on March 20, 20X3

b. Inventory purchased and delivered August 1, 20X3

c. Employee wages due April 30, 20X3

d. Federal Tax Lien filed June 30, 20X3

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[Lindrobe]

Hi topsya. I am pretty sure that the answer is (a) because it is the only secured creditor of the group. The rest would be unsecured creditors.

FAR 12/3/14, 87
AUD 2/3/14, 90
BEC 4/1/14, 88
REG 5/27/14, 94

Licensed CPA, Indiana

"Successful people do things that unsuccessful people don't want to do"

[Lindrobe]

Hi topsya. I am pretty sure that the answer is (a) because it is the only secured creditor of the group. The rest would be unsecured creditors.

FAR 12/3/14, 87
AUD 2/3/14, 90
BEC 4/1/14, 88
REG 5/27/14, 94

Licensed CPA, Indiana

"Successful people do things that unsuccessful people don't want to do"

[Topsya]

yup. That's what I think as well

I believe my book has an error….

THANKS!

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[Topsya]

yup. That's what I think as well

I believe my book has an error….

THANKS!

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[Lindrobe]

What does your book give for the answer? Probably (c) since this would be the priority of the unsecured creditors… I don't think the inventory vendor would be part of the estate since debt incurred after bankruptcy filing.

FAR 12/3/14, 87
AUD 2/3/14, 90
BEC 4/1/14, 88
REG 5/27/14, 94

Licensed CPA, Indiana

"Successful people do things that unsuccessful people don't want to do"

[Lindrobe]

What does your book give for the answer? Probably (c) since this would be the priority of the unsecured creditors… I don't think the inventory vendor would be part of the estate since debt incurred after bankruptcy filing.

FAR 12/3/14, 87
AUD 2/3/14, 90
BEC 4/1/14, 88
REG 5/27/14, 94

Licensed CPA, Indiana

"Successful people do things that unsuccessful people don't want to do"

[Topsya]

nope. my stupid books thinks it's (c)

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[Topsya]

nope. my stupid books thinks it's (c)

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[h0wdyus]

@Topsya

Which book are you using. The question you typed is the full question or an extract.

@lindrobe. The inventory creditor can be treated as a GAP creditor. They have the 3 rd ranking after Secured Creditor and Adminstrative costs.

Correct me if I am wrong.

I agree that secured creditor have number 1 priority to the extent of the collateral, the remaining becomes unsecured creditor.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

@Topsya

Which book are you using. The question you typed is the full question or an extract.

@lindrobe. The inventory creditor can be treated as a GAP creditor. They have the 3 rd ranking after Secured Creditor and Adminstrative costs.

Correct me if I am wrong.

I agree that secured creditor have number 1 priority to the extent of the collateral, the remaining becomes unsecured creditor.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[jferguson0000]

One thing the Wiley text says about this is that secured creditors are technically not a part of the bankruptcy priorities because they never become part of the bankruptcy estate i.e. they get paid before bankruptcy proceeding even start. If however, they are not paid back fully, the remainder owed to them then puts them at the unsecured creditor level and they fall to the bottom of the unsecured creditors list. Maybe this is why your book says (c).

AUD - 81(5/29/13)
BEC - 76(10/13/13)
FAR - 70(4/1/13), 68(7/2/13), 81(2/28/14)
REG - 65(5/30/14), 73(8/31/14), 83(10/8/14) DONE!!!

[jferguson0000]

One thing the Wiley text says about this is that secured creditors are technically not a part of the bankruptcy priorities because they never become part of the bankruptcy estate i.e. they get paid before bankruptcy proceeding even start. If however, they are not paid back fully, the remainder owed to them then puts them at the unsecured creditor level and they fall to the bottom of the unsecured creditors list. Maybe this is why your book says (c).

AUD - 81(5/29/13)
BEC - 76(10/13/13)
FAR - 70(4/1/13), 68(7/2/13), 81(2/28/14)
REG - 65(5/30/14), 73(8/31/14), 83(10/8/14) DONE!!!

[h0wdyus]

@jferuson0000 : what you say is right, but even in this case, the GAP creditor i.e the creditor who sold inventory will get preference over employee salary. Hmm the answer c still does not make sense to me.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[h0wdyus]

@jferuson0000 : what you say is right, but even in this case, the GAP creditor i.e the creditor who sold inventory will get preference over employee salary. Hmm the answer c still does not make sense to me.

FAR - 81 29th Aug 2013
AUD - 84
REG - 82
BEC - 89 29th Aug 2014
Using Yager

FROM NJ

[Topsya]

@h0wdyus this came from Lambers book

It's probably an error. Not the only one in that book….

You know, when you are saying: “The inventory creditor can be treated as a GAP creditor. They have the 3 rd ranking after Secured Creditor and Administrative costs.”

and what about Domestic Obligations, such as alimony and child support?

correct me if I'm wrong, but the priorities are the following:

1. secured creditor to the extent of the proceeds of the collateral

2. Domestic Obligations: alimony, child suport

2. Admin Costs in the bankruptcy proceedings

4. GAP Creditors

etc….

AUD - 90
FAR - 83
BEC - 81
REG - 80
ETHICS - 100

[Author]

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