Question 1

basic doctrine of fairness under bankruptcy provisions states that claims must be recognized in the order of their legal and contractual priority.

Accepted Answer

A) True 
 B)False

Question 2

primary test of feasibility in a reorganization is whether the firm's fixed charges after reorganization can be covered by its projected cash flows.

Accepted Answer

A) True 
 B)False

Question 3

the event of bankruptcy under the federal bankruptcy laws, debtholders have a prior claim to a firm's income and assets before both common and preferred stockholders Moreover, in a bankruptcy all debtholders are treated equally as a single class of claimants.

Accepted Answer

A) True 
 B)False  False

Question 4

if a firm's cash flow projections indicate that it will soon be unable to meet its interest payments, a bankruptcy case cannot begin until the firm actually defaults on a scheduled payment.

Accepted Answer

A) True 
 B)False

Question 5

central question that must be addressed in bankruptcy proceedings is whether the firm's inability to meet scheduled interest payments results from a temporary cash flow problem or from a potentially permanent problem caused by falling asset values.

Accepted Answer

A) True 
 B)False

Question 6

of the actions that can be taken in bankruptcy under the standard of feasibility is to replace existing management with a new team if the quality of management is judged to have been substandard.

Accepted Answer

A) True 
 B)False  True

Question 7

Bankruptcy plays no role in settling labor disputes and product liability suits Such issues are outside the bounds of bankruptcy law and are covered by other statutes.

Accepted Answer

A) True 
 B)False

Question 8

Bankruptcy laws have been used to help reach settlements in major product liability lawsuits By using financial projections to show that contingent claims against the company jeopardize its existence, agreements are reached, partially satisfying claimants, and allowing the firm to continue operating.

Accepted Answer

A) True 
 B)False  True

Exam 25: Bankruptcy, Reorganization, and Liquidation

basic doctrine of fairness under bankruptcy provisions states that claims must be recognized in the order of their legal and contractual priority.

Correct Answer
verified

primary test of feasibility in a reorganization is whether the firm's fixed charges after reorganization can be covered by its projected cash flows.

Correct Answer
verified

the event of bankruptcy under the federal bankruptcy laws, debtholders have a prior claim to a firm's income and assets before both common and preferred stockholders Moreover, in a bankruptcy all debtholders are treated equally as a single class of claimants.

Correct Answer
verified
False

if a firm's cash flow projections indicate that it will soon be unable to meet its interest payments, a bankruptcy case cannot begin until the firm actually defaults on a scheduled payment.

Correct Answer
verified

central question that must be addressed in bankruptcy proceedings is whether the firm's inability to meet scheduled interest payments results from a temporary cash flow problem or from a potentially permanent problem caused by falling asset values.

Correct Answer
verified

of the actions that can be taken in bankruptcy under the standard of feasibility is to replace existing management with a new team if the quality of management is judged to have been substandard.

Correct Answer
verified
True

Bankruptcy plays no role in settling labor disputes and product liability suits Such issues are outside the bounds of bankruptcy law and are covered by other statutes.

Correct Answer
verified

Correct Answer
verified
True

Exam 25: Bankruptcy, Reorganization, and Liquidation

basic doctrine of fairness under bankruptcy provisions states that claims must be recognized in the order of their legal and contractual priority.

Correct AnswerverifiedShow Answer

primary test of feasibility in a reorganization is whether the firm's fixed charges after reorganization can be covered by its projected cash flows.

Correct AnswerverifiedShow Answer

the event of bankruptcy under the federal bankruptcy laws, debtholders have a prior claim to a firm's income and assets before both common and preferred stockholders Moreover, in a bankruptcy all debtholders are treated equally as a single class of claimants.

Correct AnswerverifiedFalse

if a firm's cash flow projections indicate that it will soon be unable to meet its interest payments, a bankruptcy case cannot begin until the firm actually defaults on a scheduled payment.

Correct AnswerverifiedShow Answer

central question that must be addressed in bankruptcy proceedings is whether the firm's inability to meet scheduled interest payments results from a temporary cash flow problem or from a potentially permanent problem caused by falling asset values.

Correct AnswerverifiedShow Answer

of the actions that can be taken in bankruptcy under the standard of feasibility is to replace existing management with a new team if the quality of management is judged to have been substandard.

Correct AnswerverifiedTrue

Bankruptcy plays no role in settling labor disputes and product liability suits Such issues are outside the bounds of bankruptcy law and are covered by other statutes.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedTrue

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
False

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified
True