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Question
Fact Pattern 24-1Eagle Corporation borrows $10 million from First Bank to build Grande Suites, an office complex. Eagle guarantees the payment of the loan with its "notes." Eagle owns a certificate of deposit (CD) for $1 million, which is promised to pay Grande Suites' employee medical claims. Before the loan is paid, Eagle files for bankruptcy, and the CD is returned. First Bank asks the court for the CD.
Refer to Fact Pattern 24-1. Suppose that the loan guaranty is limited to "negotiable instruments that relate to a business now or later conducted on the land." In this circumstance, under the reasoning in Case 24.2, In re Premier Interval Resorts, Inc., the court will most likely award the CD to
a. Eagle because Eagle has filed for bankruptcy.
b. Eagle because the CD relates to medical claims, not "the land."
c. First Bank because the CD relates to Grande Suites, which is a business "on the land."
d. First Bank because the loan is not yet paid.
Answer
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