CBS Business Bankruptcy & Reorganization 4

Question 1

A corporation files Chapter 11 and has a lease on its headquarters. If it neither assumes nor rejects the lease within the statutory period, what happens?

Accepted Answer

The lease is deemed rejected under § 365(d)(4) after 120 days unless the court extends the deadline

Answer

Under § 365(d)(4), a nonresidential real property lease is deemed rejected if not assumed within 120 days of the order for relief (extendable for cause).

Question 2

What is a 'stalking horse' in a Chapter 11 § 363 asset sale?

Accepted Answer

An initial bidder who sets the floor price and receives bid protections such as a break-up fee

Answer

The stalking horse bidder establishes the minimum acceptable price and typically receives break-up fee and expense reimbursement protections if outbid.

Question 3

Under Chapter 11, what is the voting threshold required for a class of creditors to accept a reorganization plan?

Accepted Answer

At least two-thirds in amount and more than one-half in number of allowed claims voting

Answer

Under § 1126(c), a class of claims accepts a plan when holders of at least two-thirds in amount and more than one-half in number of allowed claims actually voting approve it.

Question 4

What is 'substantive consolidation' in multi-entity Chapter 11 cases?

Accepted Answer

The pooling of assets and liabilities of multiple affiliated debtors into a single estate for distribution purposes

Answer

Substantive consolidation pools the assets and liabilities of related entities so creditors of each entity share in the combined estate rather than only their obligor's assets.

Question 5

When a Chapter 11 plan is confirmed, what effect does confirmation have on pre-confirmation claims?

Accepted Answer

Confirmation discharges the debtor from all pre-confirmation debts except as provided in the plan

Answer

Under § 1141(d), plan confirmation generally discharges the debtor from pre-petition debts, with obligations resting solely on the confirmed plan's terms.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Business Bankruptcy & Reorganization 4