Kim Kardashian borrowed $200,000 from Big Bank to buy inventory to sell in her make-up shop. She signed a security agreement for the bank listing the entire present and future inventory in the make-up shop, including proceeds from the sale of inventory as collateral. Big Bank never filed a financing statement. A month later, Kim borrowed $50,000 from Kanye Creditor, who was aware of Big Bank’s security interest. Kim Kardashian then defaulted on both loans and declared bankruptcy. Who has priority, Big Bank or Kanye Creditor?
Kim Kardashian borrowed $200,000 from Big Bank to buy inventory to sell in her make-up shop. She signed a security agreement for the bank listing the entire present and future inventory in the make-up shop, including proceeds from the sale of inventory as collateral. Big Bank never filed a financing statement. A month later, Kim borrowed $50,000 from Kanye Creditor, who was aware of Big Bank’s security interest. Kim Kardashian then defaulted on both loans and declared bankruptcy. Who has priority, Big Bank or Kanye Creditor?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Kim Kardashian borrowed $200,000 from Big Bank to buy inventory to sell in her make-up shop. She signed a security agreement for the bank listing the entire present and future inventory in the make-up shop, including proceeds from the sale of inventory as collateral. Big Bank never filed a financing statement. A month later, Kim borrowed $50,000 from Kanye Creditor, who was aware of Big Bank’s security interest. Kim Kardashian then defaulted on both loans and declared bankruptcy. Who has priority, Big Bank or Kanye Creditor?
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