CBA Professional Ethics & Standards 3

Question 1

A bankruptcy professional who simultaneously serves as both a creditors' committee member and a purchaser of estate assets would violate which core ethical principle?

Accepted Answer

The prohibition against self-dealing

Answer

Purchasing estate assets while serving as a fiduciary for creditors constitutes self-dealing because personal financial interests conflict with the duty to maximize recovery for creditors.

Question 2

When a debtor fails to disclose a significant asset on Schedule A/B, the responsible professional who prepared the schedules has an obligation to:

Accepted Answer

File amended schedules immediately and notify the trustee

Answer

Professionals who discover omissions in court filings must amend the documents and notify the trustee to correct the record and fulfill duties of candor and competence.

Question 3

Under what circumstances may a bankruptcy trustee employ a professional who has a connection to a creditor without ethical violation?

Accepted Answer

If the connection is fully disclosed, found not to impair judgment, and approved by the court

Answer

11 U.S.C. § 327 allows employment of professionals with connections if they are 'disinterested' or the connection does not impair independence, provided full disclosure and court approval.

Question 4

A bankruptcy administrator must maintain client confidences except when:

Accepted Answer

Disclosure is required to prevent substantial financial harm to the estate

Answer

Confidentiality yields when disclosure is necessary to prevent substantial financial harm, as protecting the estate and creditors is a paramount competing obligation in bankruptcy proceedings.

Question 5

Which action by a debtor's attorney would most clearly violate professional responsibility rules in a bankruptcy case?

Accepted Answer

Filing a voluntary petition for a corporation without board authorization

Answer

Filing a petition for a corporation without proper board authorization is an unauthorized act that violates both corporate governance rules and professional responsibility standards.

(CBA) Certified Budget Analyst Practice Test

(CBA) Certified Budget Analyst Practice Test

CBA Professional Ethics & Standards 3