CCP Bankruptcy & Insolvency in Credit Management 2

Question 1

The bankruptcy 'means test' introduced by BAPCPA 2005 is primarily used to:

Accepted Answer

Restrict individual debtors with higher incomes from filing Chapter 7 liquidation

Answer

Determine whether a business can reorganize under Chapter 11

Answer

Calculate the debtor's administrative expense obligations

Answer

Establish the priority of secured versus unsecured claims

Question 2

What is a 'fraudulent transfer' in bankruptcy law?

Accepted Answer

A pre-petition transfer made with intent to defraud creditors, or made for less than reasonably equivalent value while insolvent

Answer

Any payment made to a creditor within 90 days of filing

Answer

A transfer of assets to a secured creditor after the automatic stay is in place

Answer

A payment to an insider creditor within one year of filing

Question 3

In Chapter 11 bankruptcy, 'debtor in possession' (DIP) financing refers to:

Accepted Answer

New financing obtained by the debtor after filing that may be granted super-priority status

Answer

The existing secured lenders retaining their pre-petition collateral priority

Answer

Funds held in trust by the debtor for creditor distribution

Answer

A government-sponsored loan program for bankrupt small businesses

Question 4

A 'cramdown' in Chapter 11 proceedings allows the court to:

Accepted Answer

Confirm a reorganization plan over the objection of a dissenting class of creditors

Answer

Force the debtor to accept a liquidation plan instead of reorganization

Answer

Reduce the trustee's compensation to save estate funds

Answer

Subordinate an insider creditor's claim to general unsecured claims

Question 5

For a non-insider creditor, what is the standard look-back period during which the bankruptcy trustee can recover a preference payment?

Accepted Answer

90 days

Answer

30 days

Answer

60 days

Answer

1 year

Question 6

An 'involuntary bankruptcy' petition can be filed by creditors against a debtor when:

Accepted Answer

Three or more unsecured creditors with aggregate claims over a statutory threshold file, and the debtor is generally not paying debts as they come due

Answer

The debtor has committed fraud against creditors

Answer

The debtor defaults on a secured loan and the lender accelerates the debt

Answer

A state court appoints a receiver to manage the debtor's assets

Question 7

Under the absolute priority rule in Chapter 11, which of the following must occur before equity holders can receive any distribution?

Accepted Answer

Each senior class of creditors must be paid in full or consent to different treatment

Answer

All administrative expenses must be paid within 30 days of plan confirmation

Answer

The debtor must provide a 5-year cash flow projection approved by the court

Answer

Unsecured creditors must vote in favor of the plan by at least 75%