Mike's business is not doing too well and he is contemplating bankruptcy unless things change soon. As he currently deals with his creditors, the guiding principle should be that
A) transfers of property such as the sale of inventory will be invalidated.
B) preferences should not include family or friends.
C) bankruptcy is an avenue of last resort and should be avoided at all cost.
D) creditors of the same class should be treated equally.
E) all transactions within three months preceding bankruptcy are indefensible.

Question

Quizplus · Accepted Answer

The guiding principle for dealing with creditors during bankruptcy is that creditors of the same class should be treated equally. This means that all creditors within the same category (e.g. secured or unsecured) should receive the same proportionate payment of their claims. It is important to treat all creditors fairly to ensure a successful bankruptcy process.

Mike's Business Is Not Doing Too Well and He Is