Chapter9ed17

Chapter9ed17 - Chapter 17 Test Bank CORPORATE LIQUIDATIONS...

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Chapter 17 Test Bank CORPORATE LIQUIDATIONS, REORGANIZATIONS, AND DEBT RESTRUCTURINGS FOR FINANCIALLY DISTRESSED CORPORATIONS Multiple Choice Questions LO1 1. When the bankruptcy court grants an order for relief: a. creditors may not seek payment for their claims directly from the debtor corporation. b. the reorganization plan was accepted by creditors having at least one-half of the total number of claims and the claims represent at least two-thirds of the total amount owed. c. the bankruptcy court confirms that the reorganization plan is fair and equitable to creditors. d. the court discharges the debtor except for those claims provided for in the reorganization plan. LO1 2. In Chapter 11 plan, a. the management must approve it b. the trustee must approve it c. the stockholders must approve it d. the court and the creditors must approve it LO1 3. When the accounting equation of a corporation computes a negative ownership position because liabilities are greater than assets, the firm is: a. a distressed corporation. b. a bankrupt corporation. c. insolvent in the equity sense. d. insolvent in the bankruptcy sense. LO1 4. A bankruptcy petition filed by a firm’s creditors is: a. a Chapter 7 petition. b. a petition for liquidation. c. an involuntary petition. d. a voluntary petition. 137
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LO1 5. The duties of a debtor in possession in a Chapter 11 bankruptcy case do not include: a. filing a list of creditors and schedules of assets and liabilities with the bankruptcy court. b. operating the business during the reorganization period. c. filing a reorganization plan. d. surrendering all property to the trustee. LO1 6. Liabilities incurred after entering Chapter 11 a. can only occur after secured creditors are paid b. must be approved by creditors’ committees in liquidation cases. c. must be approved by trustees d. must be preapproved by the bankruptcy court. LO1 7. In a troubled debt restructuring involving a modification of terms, the debtor’s gain on restructuring: a. will equal the creditor’s gain on restructuring. b. will equal the creditor’s loss on restructuring. c. may or may not equal the creditor’s gain on restructuring. d. may or may not equal the creditor’s loss on restructuring. LO1 8. A single creditor a. can never file a petition for bankruptcy b. with a $10,000 or more secured claim may file a petition for bankruptcy c. with a $10,000 or more unsecured claim may file a petition for bankruptcy if there are fewer than 12 unsecured creditors d. with a $10,000 or more unsecured claim may file a petition for bankruptcy if there are more than 12 unsecured creditors LO1 9. A case against a corporate debtor a. can be filed only under Chapter 7 b. can be filed only under Chapter 11 c. * can be filed either under Chapter 7 or Chapter 11 d. will be determined by the trustee whether is shall be Chapter 7 or Chapter 11 138
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LO1 10. A primary difference between voluntary and involuntary bankruptcy petitions is that: a. creditors file the petition in an involuntary filing.
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Chapter9ed17 - Chapter 17 Test Bank CORPORATE LIQUIDATIONS...

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