1.
17. Kessler Company has filed a voluntary bankruptcy petition.Kessler’s unsecured debts
include administration costs owed to accountants, attorneys, and appraisers.It also owes federal
and state taxes.Kessler still owes various employees for the previous month’s wages accrued
before the petition was filed.None of these wages are owed to the officers and at most total
$4,000 per employee.The company also owes several unsecured creditors for claims arising in
the ordinary operation of the business. All of these latter claims arose before Kessler filed the
bankruptcy petition.What are the priorities from highest to lowest of these listed debts and
claims?
Select one:
a. The claims arising in the ordinary operation of the business; the administration costs; the
employees’ wages; the federal and state taxes.
b. The administration costs; the employees’ wages; the federal and state taxes; the claims
arising in the ordinary operation of the business.
c. The federal and state taxes; the administration costs; the claims arising in the ordinary
operation of the business; the employee’s wages.
d. The claims arising in the ordinary operation of the business; the federal and state taxes; the
administration costs; the employees’ wages.
Solution
17. Kessler Company has filed a voluntary bankruptcy petition.Kessler’s unsecured debts
include administration costs owed to accountants, attorneys, and appraisers.It also owes federal
and state taxes.Kessler still owes various employees for the previous month’s wages accrued
before the petition was filed.None of these wages are owed to the officers and at most total
$4,000 per employee.The company also owes several unsecured creditors for claims arising in
the ordinary operation of the business. All of these latter claims arose before Kessler filed the
bankruptcy petition.What are the priorities from highest to lowest of these listed debts and
claims?
Answer :

2.
b. The administration costs; the employees’ wages; the federal and state taxes; the claims
arising in the ordinary operation of the business.