CBS Debt Restructuring & Management 2

Question 1

Under a Chapter 11 plan, a class of creditors is deemed to have accepted the plan if what percentage of allowed claim amount votes in favor?

Accepted Answer

At least two-thirds

Answer

A class accepts a Chapter 11 plan if creditors holding at least two-thirds in amount and more than one-half in number of allowed claims vote in favor.

Question 2

What is a 'prepackaged' bankruptcy filing?

Accepted Answer

A plan of reorganization negotiated and voted on by creditors before filing

Answer

A prepackaged bankruptcy involves soliciting and obtaining creditor votes on the reorganization plan before the bankruptcy petition is filed, reducing time in court.

Question 3

In debt restructuring, what does an 'out-of-court workout' primarily aim to avoid?

Accepted Answer

Formal bankruptcy proceedings

Answer

An out-of-court workout seeks to restructure obligations through private negotiations with creditors to avoid the cost and publicity of formal bankruptcy proceedings.

Question 4

Which type of debt restructuring involves exchanging existing debt for new debt instruments with different terms?

Accepted Answer

Debt exchange offer

Answer

A debt exchange offer replaces existing debt securities with new instruments that typically have modified maturities, interest rates, or principal amounts.

Question 5

What is 'negative pledge' in the context of debt restructuring agreements?

Accepted Answer

A borrower's promise not to pledge assets as collateral to other lenders

Answer

A negative pledge clause contractually prohibits the borrower from encumbering its assets with liens in favor of other creditors, protecting existing unsecured lenders.

(CBS) Certified Bankruptcy Specialist Practice Test

(CBS) Certified Bankruptcy Specialist Practice Test

CBS Debt Restructuring & Management 2