CCP Bankruptcy & Insolvency in Credit Management

Question 1

Which chapter of the U.S. Bankruptcy Code is primarily used by businesses seeking reorganization while continuing operations?

Accepted Answer

Chapter 11

Answer

Chapter 7

Answer

Chapter 13

Answer

Chapter 15

Question 2

What is an 'automatic stay' in bankruptcy proceedings?

Accepted Answer

A court injunction that halts most collection actions against the debtor upon filing

Answer

A delay granted to debtors to file schedules

Answer

A temporary freeze of the debtor's assets pending audit

Answer

A mandatory waiting period before a trustee is appointed

Question 3

Under Chapter 7 bankruptcy liquidation, what is the primary role of the trustee?

Accepted Answer

Liquidate non-exempt assets and distribute proceeds to creditors

Answer

Negotiate a repayment plan with creditors

Answer

Oversee the debtor's continued business operations

Answer

Approve the debtor's plan of reorganization

Question 4

A 'preference payment' in bankruptcy refers to a transfer made by the debtor:

Accepted Answer

To an unsecured creditor within 90 days before filing that improves their position over other creditors

Answer

To a secured creditor within 2 years before filing

Answer

To pay employee wages within 30 days before filing

Answer

To a government tax authority within 1 year before filing

Question 5

Which of the following creditor classes has the HIGHEST priority in a Chapter 7 liquidation distribution?

Accepted Answer

Secured creditors with perfected liens

Answer

General unsecured creditors

Answer

Equity interest holders

Answer

Subordinated debenture holders

Question 6

What does 'discharge' mean in the context of a bankruptcy proceeding?

Accepted Answer

The debtor is released from personal liability for specific debts

Answer

The trustee is removed from the case

Answer

The court dismisses the bankruptcy petition

Answer

All estate assets have been fully liquidated

Question 7

A credit manager files a 'proof of claim' in a bankruptcy case. What is the purpose of this document?

Accepted Answer

To formally assert the amount and basis of the creditor's claim against the estate

Answer

To request the automatic stay be lifted

Answer

To report suspected fraud by the debtor to the trustee

Answer

To object to the debtor's proposed plan of reorganization