Case Study:

Company X$,$ a manufacturing firm, needs to purchase new equipment to expand its operations. Due to limited liquidity, they seek financing from Bank Y to acquire the machinery. Bank Y agrees to extend credit to Company X$,$ with the equipment serving as collateral.

As part of the financing arrangement, Company X and Bank Y enter into a security agreement, granting Bank Y a security interest in the newly acquired equipment. This security interest is crucial for Bank Y to secure repayment of the loan provided to Company X$.$

However, shortly after acquiring the equipment, Company X faces financial difficulties due to a downturn in the market. Despite their best efforts, they default on the loan from Bank Y$.$

Questions:

$1.$ Define a security agreement and its significance in the context of creditor$-$debtor relationships.

$2.$ Explain the concept of a Purchase Money Security Interest $($PMSI$)$ and provide an example from the case study.

$3.$ What is attachment, and why is it important for a security interest to be enforceable against the debtor?

$4.$ Describe the process of perfection of security interests and discuss its importance in prioritizing claims against collateral.

$5.$ What are the methods of perfection mentioned in the case study, and how do they differ?

$6.$ How does the priority of security interests work, particularly in cases of conflicting claims?

$7.$ Discuss the rights and duties of a secured party when the debtor defaults on an obligation.

$8.$ Explain the difference between repossession through self$-$help and repossession by judicial action.

$9.$ In the context of bankruptcy administration, how does the automatic stay affect security interests?

$10.$ What are the key features and objectives of Chapter $7$ bankruptcy liquidation?

$11.$ How does Chapter $11$ bankruptcy differ from Chapter $13,$ both in terms of process and objectives?

$12.$ Define suretyship and explain the roles of debtor, creditor, and surety in a surety agreement.

$13.$ What are the obligations of a creditor towards disclosing risks to a surety before forming a contract?

$14.$ Discuss the liability of a surety in case of debtor default and the defenses available to them.

$15.$ Explain the rights of a surety, including reimbursement, subrogation, exoneration, and contribution.

$16.$ How is a surety discharged from their obligations under a suretyship contract, according to the case study?