Coastline, Inc., had a purchase money security interest in office machines owned
ID: 2557336 • Letter: C
Question
Coastline, Inc., had a purchase money security interest in office machines owned by Skyway Co. that was perfected 120 days before Skyway filed for bankruptcy. Coastline sold the machines to satisfy its claim after the court granted its petition to vacate the stay of proceedings against the debtor. In this situation,
Possible Answers:
The security interest was a preference voidable by the trustee
If the debt exceeded the proceeds, Coastline may file a claim as a general creditor
All proceeds must be turned over to the trustee for distribution
If the proceeds exceeded the debt, Coastline may keep the excess because the security interest was a property right
Explanation / Answer
The possible answer in this case would be option D I.e, if the proceeds exceed the debt, Coastline may keep the excess because the security interest was a property right, this answer is suggested because it best suits the given scenario .