Priority of Creditors

Question 1

Personal property security act

Answer 1

-used in all jurisdictions in canada
-creates a unified approach toward the use of personal property as security

Question 2

How to create a secured relationship

Answer 2

1-secured party and debtor enter into a security agreement
2-security interest attaches to collateral
-security interest is perfected by registration or possession of the collateral

Question 3

PMSI

Answer 3

Purchase security money order

Question 4

Guarantees

Answer 4

These are used by creditors to ensure payment of debt by a more substantial debtor

Question 5

The bank act

Answer 5

Federal statute allowing banks flexibility in what they can take as security

Question 6

Bankruptcy and insolvency act

Answer 6

-federal statute
-preserves as many of the debtors assets as possible
-rehabs the debtor by forgiving the unpaid debt

Question 7

Insolvency

Answer 7

A person is unable to pay his debts as they become due

Question 8

Bankruptcy

Answer 8

The process by which a debtors assets are transferred to a trustee

Question 9

Involuntary bankruptcy process

Answer 9

-creditor petitions the court
-results in assignment of the debtors assets to the trustee in bankruptcy

Question 10

Trustee in bankruptcy

Answer 10

-holds assets in trust for the creditors
-preserves asset value
-sell the assets and distribute the proceeds fairly to the creditors