Lakeside Bank holds a $100,000 note secured by a building owned by Fly-By-Night Manufacturing, which has filed for bankruptcy under Chapter 7 of the Bankruptcy Code.If the property has a book value of $120,000 and a fair market value of $90,000, what is the best way to describe the note held by Second City Bank? The bank has a(n)

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In bankruptcy, a secured claim is backed by collateral, which in this case is the building valued at the fair market value of $90,000. The remaining $10,000 of the note, which exceeds the collateral's value, is considered an unsecured claim.

Lakeside Bank Holds a $100,000 Note Secured by a Building