Ratner's Service Centre encountered financial setbacks over a period of time,and eventually found itself insolvent.Among its creditors were the first and second mortgagees of the land and building which Ratner's owned,trade creditors,employees who had not been paid wages,and the municipality,for arrears of property taxes.Ratner's decides not to make a proposal to its creditors.On default,the first and second mortgagees may realize on the security of the land and building,rather than claim as creditors in the bankruptcy proceedings.

Question

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The first and second mortgagees have security on the land and building owned by Ratner's, and can choose to realize on that security rather than claiming as creditors in the bankruptcy proceedings. This is in accordance with the principles of secured lending.

Ratner's Service Centre Encountered Financial Setbacks Over a Period of Time,and