Asked by Patricia Garcia on May 14, 2024
Verified
Which of the following is a transfer or assignment by a debtor of title to property to a trustee or an assignee who sells the property with the proceeds of the sale going to pay creditors on a pro rata basis?
A) An assignment for the benefit of creditors
B) A composition agreement
C) A sale and transfer agreement
D) A pro rata agreement
E) A termination agreement
Assignment
The transfer of rights, property, or responsibilities from one party to another.
Trustee
A person or organization that holds and administers property or assets for the benefit of a third party under the terms of a trust agreement.
Creditors
Individuals or entities that are owed money or other assets by another entity, known as the debtor.
- Understand voluntary agreements for debt reduction and their implications for creditors and debtors.
Verified Answer
EM
Erika MolinetMay 20, 2024
Final Answer :
A
Explanation :
An assignment for the benefit of creditors is a legal process in which a debtor transfers title to property to a trustee or assignee, who then sells the property and uses the proceeds to pay creditors on a pro rata basis. This is a form of voluntary liquidation outside of bankruptcy proceedings.
Learning Objectives
- Understand voluntary agreements for debt reduction and their implications for creditors and debtors.