CBS Business Bankruptcy & Reorganization 2

Question 1

Under Chapter 11, what is the 'exclusivity period' and how long does it initially last?

Accepted Answer

The period during which only the debtor may file a plan of reorganization, lasting 120 days

Answer

Under 11 U.S.C. § 1121(b), the debtor has an initial 120-day exclusivity period to file a plan, which can be extended up to 18 months.

Question 2

What is a 'cram down' in the context of Chapter 11 bankruptcy?

Accepted Answer

Confirming a plan over the objection of a dissenting class of creditors if the plan meets statutory requirements

Answer

A cram down under § 1129(b) allows plan confirmation over a rejecting class if the plan is fair and equitable and does not discriminate unfairly.

Question 3

Which entity typically serves as the primary oversight body in a Chapter 11 case without a trustee appointed?

Accepted Answer

The debtor in possession (DIP)

Answer

In Chapter 11, the debtor in possession retains management and operates the business under the supervision of the bankruptcy court.

Question 4

What is the 'absolute priority rule' in Chapter 11 reorganization?

Accepted Answer

Senior classes must be paid in full before junior classes receive anything under a plan

Answer

The absolute priority rule under § 1129(b)(2)(B) requires that a senior class be paid in full before a junior class receives any distribution.

Question 5

A business files Chapter 11 and seeks to reject an executory contract with a supplier. When is the rejection effective?

Accepted Answer

Upon court approval of the rejection motion

Answer

Rejection of an executory contract under § 365 requires court approval and is effective upon entry of the court's order.

(CBS) Certified Bankruptcy Specialist Practice Test