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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. Under the decision in Case 24.2, In re Premier Interval Resorts, Inc., the court will most likely award the CD to
a. Eagle because Grande Suites' employees may have medical claims.
b. Eagle because under UCC Article 3, a CD is not a note.
c. First Bank because the loan is not yet paid.
d. First Bank because UCC Article 3 treats a CD as a note.
Answer
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