. Liquidations in bankruptcy When a business is worth more if its assets are sol
ID: 2802648 • Letter: #
Question
. Liquidations in bankruptcy When a business is worth more if its assets are sold than if it continues to operate, then the business is liquidated, and the proceeds from the sale are used to satisfy any outstanding debt Liquidation occurs when businesses file for bankruptcy under Chapter 7 of the Federal Bankruptcy Reform Act. This act provides for an equitable distribution of the debtor's assets among the creditors. The distribution of assets is governed by a certain priority of claims which of the following claimants has the highest priority according to Chapter 77 O Federal taxes due O Secured creditors O Unsecured claims for customer deposits O Past-due property taxesExplanation / Answer
Chapter 7 of bankruptcy law states that if liquidation value of company is more than continue operation value, then the management should liquidate the company and pays the proceed to its participants.
From the given options customer deposit claim is highest priority among all four options.
Option (C) is correct answer.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.