Klose Corp. is worth $15 million as an operating company. The company is in financial distress, and if it were liquidated, the companys value would only be $10 million. The company currently carries $16 million of debt on its balance sheet.

Messi Inc. is one of Kloses creditors with a $3 million claim. Messi is pushing Klose to foreclose even when the value of the operating company is more than the total value of its liquidated assets.

Klose Corp.s situation represents the:

A. Fraudulent conveyance problem

B. Common pool problem

C. Holdout problem