CBS Creditor Rights & Negotiations 2

Question 1

A secured creditor holds a lien on a debtor's commercial building worth $500,000 with a $600,000 claim. What is the creditor's unsecured deficiency claim?

Accepted Answer

$100,000

Answer

The deficiency claim equals the amount by which the secured claim exceeds the collateral value: $600,000 - $500,000 = $100,000.

Question 2

Under 11 U.S.C. § 362(d)(2), a secured creditor may obtain relief from the automatic stay if the debtor has no equity in the property AND:

Accepted Answer

The property is not necessary for an effective reorganization

Answer

Section 362(d)(2) requires both lack of equity and that the property is not necessary for an effective reorganization.

Question 3

In a Chapter 11 cramdown, what is the minimum interest rate a secured creditor must receive on its allowed secured claim?

Accepted Answer

A rate reflecting current market conditions for comparable loans

Answer

Under Till v. SCS Credit Corp., the cramdown rate is the prime rate plus a risk adjustment reflecting current market conditions.

Question 4

A creditor who received a payment of $15,000 from an insolvent debtor 75 days before bankruptcy files a preference avoidance claim. What is the most likely outcome?

Accepted Answer

The payment is protected because it occurred outside the 90-day window

Answer

The 90-day preference period under § 547(b)(4)(A) means a payment 75 days before filing falls outside the lookback window for non-insiders.

Question 5

Which type of creditor holds a claim that is NOT dischargeable in a Chapter 7 case under § 523(a)(2)?

Accepted Answer

A creditor holding a claim arising from fraud

Answer

Section 523(a)(2) excepts from discharge debts obtained by false pretenses, fraud, or misrepresentation.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Creditor Rights & Negotiations 2