CBB Legal & Regulatory Compliance 4

Question 1

Which legal doctrine can make a buyer liable for a seller's debts even in an asset sale if the transaction is structured to defraud creditors?

Accepted Answer

Successor liability under fraudulent transfer law

Answer

Fraudulent transfer (or conveyance) law allows creditors to void asset sales made to hinder, delay, or defraud them, imposing successor liability on the buyer.

Question 2

A business broker is required to disclose a known material fact about a business to a prospective buyer. Which of the following is an example of a material fact?

Accepted Answer

A pending lawsuit that could significantly affect the business's revenues

Answer

A pending lawsuit that could materially impact revenues is a material fact that must be disclosed because it directly affects the business's value.

Question 3

The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100+ employees to provide how many days' advance notice before a mass layoff or plant closing?

Accepted Answer

60 days

Answer

The federal WARN Act requires 60 days' advance written notice to affected workers before a qualifying mass layoff or facility closing.

Question 4

In an asset purchase agreement, the 'representations and warranties' section serves primarily to:

Accepted Answer

Allocate risk by having each party affirm specific facts about the business

Answer

Representations and warranties are factual statements about the business on which the other party relies, allocating risk if those statements prove false.

Question 5

Which type of lease assignment clause requires landlord consent before a tenant can transfer the lease to a new business owner?

Accepted Answer

An anti-assignment clause requiring landlord approval

Answer

Anti-assignment clauses in commercial leases require the landlord's written consent before the tenant can assign the lease to a buyer.

(CBB) Certified Business Brokers Practice Test

(CBB) Certified Business Brokers Practice Test

CBB Legal & Regulatory Compliance 4