Best Yogurt Corporation orders refrigeration equipment from Cold Storage, Inc, which has an unperfected security interest in the equipment until it is paid for. Meanwhile, Best Yogurt takes out a loan from Dependable Credit, Inc, subject to a security
interest in Best Yogurt's building and equip¬ment, which Dependable Credit perfects. Best Yogurt files a petition in bankruptcy for relief in a liquidation proceeding. If the petition is granted, in what or¬der will the creditors be paid?
The order of the priority of the creditors in this problem is (1) Dependable Credit, which has a perfected security interest in Best Yogurt's building and equipment, and (2) Cold Storage, which has only an unper¬fected security in¬terest in Best Yogurt's refrigeration equipment.
This is because, un¬der the priority es¬tablished 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 credi¬tors are paid last, if at all.
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