Tom, Lucinda, and Hye Are Friends of Ali and Make

Multiple Choice

Tom, Lucinda, and Hye are friends of Ali and make various loans to him so that he can run his falafel-making business.The business requires cash as well as equipment to run.Tom has loaned Ali a stove worth $3000 which, under the terms of the loan agreement, Ali has pledged to return to Tom whenever Tom requests.Lucinda has lent Ali $3000 in cash, and Hye has given Ali 100 kilograms of sesame seeds worth $1000.Ali's obligations to Lucinda and Hye are simply to repay them when he can.In the event of Ali's bankruptcy, which of the following statements is TRUE?

A) Tom is considered an unsecured creditor, but Lucinda or Hye are not.
B) Tom is automatically considered an unsecured creditor, but so are Lucinda and Hye.
C) Tom is considered a secured creditor, but Lucinda and Hye are not.
D) The claims of Lucinda and Hye have priority over Tom's.
E) Tom is a preferred unsecured creditor compared to Lucinda and Hye because he advanced credit first.