Asked by Ke'Darius Thornton on Jun 14, 2024

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Except for the owners,which group has the lowest claim in a bankruptcy situation?

A) Commercial banks
B) Investors
C) Trade debt
D) Leasing companies

Bankruptcy Situation

A legal status of a person or entity that cannot repay debts to creditors and seeks relief through court intervention.

Commercial Banks

Financial Institutions that provide a range of services such as accepting deposits, providing loans, and offering basic investment products to the public.

Investors

Individuals or entities that allocate capital to ventures, assets, or projects with the expectation of generating a financial return.

  • Comprehend the critical nature and outcomes of bankruptcy legislations, including their influence on corporate restructuring and the ordering of creditor claims.
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LP
Liberty PerryJun 20, 2024
Final Answer :
C
Explanation :
Trade debt, also known as unsecured debt, has the lowest priority in a bankruptcy situation. This means that if there are limited funds to distribute to creditors, trade debt holders will receive the least amount of compensation or may not receive anything at all. Commercial banks and leasing companies typically have secured debt, meaning they have collateral to recover in case of default, and investors may also have priority claims based on the terms of their investment contracts.