Real Estate Sales Corporation (RESC) orders office equipment from Standard Goods, Inc., which has an unperfected security interest in the equipment until it is paid for. Meanwhile, RESC takes out a loan from Trend Credit, Inc., subject to a security interest in RESC's building and equipment, which Trend perfects. RESC files a petition in bankruptcy for relief in a liquidation proceeding. If the petition is granted, in what order will RESC's creditors be paid?
What will be an ideal response?
The order of the priority of the creditors in this problem is (1) Trend, which has a perfected security interest in RESC's building and equipment, and (2) Standard, which has only an unperfected security interest in RESC's office equipment. This is because, under the priority established by the Bankruptcy Code, and between the creditors listed in this question, those with perfected security interests have the highest priority. In almost cases, including this one, the claims of unsecured creditors are paid last, if at all.
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What will be an ideal response?
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