Sunn Energy, Inc., needs funds to meet its payroll, to make other current operating expenses, and to pay its creditors. Terence, Sunn's only shareholder, loans the company $100,000 and accepts a promissory note signed on behalf of Sunn by Ulrich, the firm's accountant. Sunn's financial problems continue, however, and the firm's creditors file an involuntary petition to force it into bankruptcy. Is Terence entitled to repayment of the loan to Sunn? If so, what is the priority of the claim?

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The Answer of Sunn Energy, Inc., needs funds to meet its payroll, to make other current operating expenses, and to pay its creditors. Terence, Sunn's only shareholder, loans the company $100,000 and accepts a promissory note signed on behalf of Sunn by Ulrich, the firm's accountant. Sunn's financial problems continue, however, and the firm's creditors file an involuntary petition to force it into bankruptcy. Is Terence entitled to repayment of the loan to Sunn? If so, what is the priority of the claim?