Should a business fail after receiving shipping documents from its bank on the basis of a trust receipt, the bank:

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When a business fails after receiving shipping documents from its bank on the basis of a trust receipt, the bank has a prior claim relative to other general creditors. This means that the bank has the first right to obtain payment from the proceeds of the sale of the merchandise. However, the amount due to the bank is limited to the value of the merchandise less any cash deposits made by the business. Therefore, the bank becomes a preferred creditor to the extent of the amount due less cash deposits with the bank. Options A, B, and C are incorrect as they do not represent the usual course of action in such a scenario.

Should a Business Fail After Receiving Shipping Documents from Its