The partnership of Joe Baker, Art Green, and Guy Madison is insolvent. The partnership's liabilities exceed its assets by $123,000. The liabilities include a $25,000 loan from Madison. Green is personally insolvent. His personal liabilities exceed his personal assets by $13,500. Green has filed a voluntary petition in bankruptcy. Under these circumstances, partnership creditors
A. Must proceed against the partnership and all the general partners in one lawsuit so that losses may be shared equitably among the partners.
B. Rank first in payment and all (including Madison) will share proportionately in the partnership assets to be distributed.
C. Will have the first claim to partnership property to the exclusion of the personal creditors of Green.
D. Do not have the right to share pro rata with Green's personal creditors in Green's personal assets.
Answer: C. Will have the first claim to partnership property to the exclusion of the personal creditors of Green.
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