Chester Owns and Operates a Farm

Multiple Choice

Chester owns and operates a farm. As a result of financial difficulties in the past, a bank currently holds a security interest in all of Chester's after- acquired property. Unfortunately, Chester's situation recently deteriorated even further when his thresher (a type of farm vehicle) developed irreparable defects. He cannot continue on with business unless he acquires a replacement. That appears to be a problem because he has no money for the purchase price. And while he could otherwise simply purchase the new machine on credit, the bank's security interest suggests that any new security interest necessarily would rank second. Which of the following statements is TRUE?

A) A thresher vendor is entitled to acquire a purchase money security interest and to enjoy super- priority without the bank's consent.
B) Chester's best option is to secretly purchase the new thresher on credit, without disclosing that fact to the bank that holds the old security interest.
C) A purchase money security interest is available to Chester only if his bank agrees to lend him more money and to take a new form of security over the new thresher.
D) Chester's best option is to declare bankruptcy.
E) Chester's only hope of purchasing the new thresher is to persuade his bank to forgive part of his existing debts.