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P had fallen upon hard times, and in hopes of surmounting the financial difficulty, Robert Law, president, approached the drivers and asked for certain wage concessions that he would plow back into the company with the aim of keeping it afloat. In return, he promised that if the company made a profit at the end of the year, the employees would be entitled to reimbursement for their 'loan.' The drivers were working under a union contract paying $12.71 for straight time and $19.06 for overtime, based upon a forty-hour week. Law asked that they accept $10 an hour for straight time and $15 an hour for overtime. Five of the twelve drivers agreed to accept the wage-cut proposal. The acceptors then signed a loan agreement. Law promised to keep the company open for a year in exchange for the loans; the bookkeeper testified that the company was in serious debt at that time; and because employees were aware of the financial difficulty that the company was facing, the trial justice could have easily inferred that the employees understood the risk involved. The employees made a claim for priority status under the Bankruptcy Code. The trial justice found that the moneys withheld were loans and not wages.

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