The priority of claims established by Chapter 7 of the Bankruptcy Reform Act of 1978 gives priority to claims of ________.
A) unsecured creditors over claims of secured creditors
B) preferred stockholders over claims of unsecured creditors
C) wages payable over claims of unsecured creditors
D) farmers in grain storage over expenses of administering the bankruptcy

Question

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Chapter 7 of the Bankruptcy Reform Act of 1978 prioritizes the claims of secured creditors and specific priority claims over general unsecured claims. The first priority claim is for wages owed to employees of the bankrupt companies, up to certain limits. This means that wages that were earned by employees but not yet paid are given priority over other unsecured claims.

The Priority of Claims Established by Chapter 7 of the Bankruptcy