Question 1

Each of the following parties has a right to file a builders' lien EXCEPT the one that

Accepted Answer

Selling tools or machinery to the contractor does not directly contribute to the improvement of the property in a way that would typically grant a right to file a builders' lien. Builders' liens are generally reserved for parties who contribute labor, services, or materials directly to a construction project.

Question 2

All creditors are considered to be equal in bankruptcy law.

Accepted Answer

In bankruptcy law, creditors are categorized into different classes with varying priorities for repayment. Secured creditors typically have higher priority over unsecured creditors.

Question 3

On a bankruptcy,preferred creditors rank in priority before secured creditors.

Accepted Answer

Secured creditors have priority over preferred (or unsecured) creditors because they have a charge over a specific asset as collateral for the debt.

Question 4

Of the preferred creditors,the highest priority of claim is

Accepted Answer

The expenses and fees of the trustee in bankruptcy are given the highest priority among preferred creditors to ensure the administration of the bankruptcy process is funded.

Question 5

As far as claims against the property of a bankrupted debtor go,the trustee pays the general creditors in priority to which of the following?

Accepted Answer

The answer of As far as claims against the property...

Question 6

An unpaid seller who repossesses goods from a bankrupt and then sells them,can still make a claim for any deficiency in respect of those goods.

Accepted Answer

The answer of An unpaid seller who repossesses goods from...

Question 7

The court might refuse a debtor's discharge by bankruptcy for any of the following reasons EXCEPT that

Accepted Answer

The answer of The court might refuse a debtor's discharge...

Question 8

In most Canadian jurisdictions,a plaintiff must start court proceedings within a two-year period.Limitation periods are justified on any of the following grounds EXCEPT that

Accepted Answer

The answer of In most Canadian jurisdictions,a plaintiff must start...

Question 9

Where an insolvent person transfers land which he owns to his spouse at one-third of its fair market value within 12 months of his bankruptcy,his spouse may be required to pay the difference gained to the trustee in bankruptcy.

Accepted Answer

This is known as a "clawback provision" under bankruptcy laws. The trustee may require the spouse to pay the difference gained as it is considered a fraudulent transfer to avoid paying off debts.

Question 10

In the context of bankruptcy proceedings,liquidating dividends are

Accepted Answer

The answer of In the context of bankruptcy proceedings,liquidating dividends...

Question 11

Brianna,a framing contractor,has a duly registered builders' lien on the property owned by Bowing Development.This lien gives Brianna the right to

Accepted Answer

The answer of Brianna,a framing contractor,has a duly registered builders'...

Question 12

In bankruptcy proceedings,the term "settlements" refers to

Accepted Answer

The answer of In bankruptcy proceedings,the term "settlements" refers to
...

Question 13

You are a duly licensed and appointed trustee to handle the Markin Brothers bankruptcy.You have taken possession of both personal and business assets of Sam and Joe Markin.You have retrieved all the books and documents relating to their affairs.You also have the authority to do each of the following EXCEPT

Accepted Answer

A trustee in bankruptcy has the authority to manage the financial affairs of the bankrupt entity, including borrowing money, negotiating with creditors, managing the business, and hiring legal representation. However, dismissing inspectors, who are often appointed by the court or regulatory bodies to oversee the bankruptcy process, is not within the trustee's powers. Their role is to ensure compliance with legal and regulatory standards, and their dismissal would undermine this oversight function.

Question 14

Mike's business is not doing too well and he is contemplating bankruptcy unless things change soon.As he currently deals with his creditors,the guiding principle should be that

Accepted Answer

The guiding principle in dealing with creditors in a situation of potential bankruptcy is that creditors of the same class should be treated equally. This means that all creditors in the same category, such as unsecured creditors, must be treated the same, and one cannot be paid in full while the others receive only partial payment. This principle ensures fairness and avoids preferential treatment of certain creditors over others.

Question 15

A secured creditor does not have to prove its debt before its debt ranks as a claim against the bankrupt's estate.

Accepted Answer

The answer of A secured creditor does not have to...

Question 16

The RRSPs of a bankrupt are exempt from seizure.

Accepted Answer

The answer of The RRSPs of a bankrupt are exempt...

Question 17

A bulk sale,as defined by provincial statutes,is a sale

Accepted Answer

A bulk sale is a sale of essentially all the stock-in-trade, fixtures, and chattels of a business. It is often done when a business is being sold or transferring ownership, and it is important to ensure that it does not avoid paying creditors their equitable share in the assets of the company. Provincial statutes govern bulk sales rather than the federal Bulk Sales Act, and it does not necessarily involve all goods in process and semi-finished inventories.

Question 18

Where,just before declaring bankruptcy,a person transfers title of real property to his children telling them that he wants to protect the property from bankruptcy,the transfer is a fraudulent conveyance or transfer.

Accepted Answer

The transfer of property just before declaring bankruptcy with the intention of protecting it from creditors is considered a fraudulent conveyance or transfer.

Question 19

Businesses are often required to extend credit as a means of increasing sales.Before granting credit,businesses are encouraged to take any of the following steps EXCEPT

Accepted Answer

Requesting personal guarantees of the principals is an important step to mitigate the risk of extending credit. It ensures that the individuals behind the company are also personally committed to paying back the debt, increasing the likelihood of repayment. Therefore, not requesting personal guarantees is not a recommended step before granting credit.

Question 20

For five years,Maxine had been regularly receiving the same bill for $850 from Credit Landscaping.She didn't think she should pay it because they botched up the landscaping around her house.However,now,after these five years,she sends them a $425 cheque with a note saying,"Take this-it's all you're going to get." This move by Maxine will

Accepted Answer

Maxine sending a partial payment after five years will not restart the statute of limitations, nor will it get her out of the liability completely. However, it also won't immediately give rise to a legal action or prompt Credit Landscaping to turn the balance over to a collection agency. The outstanding balance remains unpaid, but the statute of limitations continues to run.

Quiz 29: Creditors Rights