Ashitaka has declared bankruptcy and his trustee is currently dividing his assets.Ashitaka has three creditors.One,a bank,has a general security agreement on a loan for $30 000.The second is his friend,who is owed $1000.The third is the government,owed $5000.Ashitaka has only one asset,his car,with fair market value of $33 000.Which of the following describes how the creditors will be paid?

Question

Quizplus · Accepted Answer

The bank has a general security agreement, giving it priority over the car's value. It will receive $30,000, leaving $3,000. The government, as a preferential creditor, will receive the remaining $3,000, and the friend will receive nothing.

Ashitaka Has Declared Bankruptcy and His Trustee Is Currently Dividing