LAW 603 Lecture 10: Chapter 24 Cases
11 Jan 2017
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Gave bank a general security interest on restaurant property that she owns in exchange for ,000 loan. Tourism declined; restaurant market value fell to ,000. Page 5 (categories of creditors) + concept summary 24. 1. Secured creditors are those whose interests are secured by assets of the debtor, such as a piece of equipment, inventory, or accounts receivable. If the debtor defaults on the loan, the creditor can claim the asset. If the amount realized on its disposition/value is less than the amount of the debt, creditor can claim for the balance of the debt owing as an unsecured creditor. An unsecured creditor is entitled to a share of bankrupt"s assets only after secured and preferred creditors are satisfied (last priority/weakest claim). The bank has claim to the ,000 (market value of restaurant property) as a secured creditor, and has a claim to the remaining.
