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

The means test compares the debtor's income to the state median; if income exceeds the median and the test shows sufficient disposable income, the debtor may be pushed into Chapter 13 rather than Chapter 7.

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

A fraudulent transfer is one made either with actual intent to hinder or defraud creditors, or constructively fraudulent (debtor was insolvent and received less than fair value), and is recoverable by the trustee.

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

DIP financing is post-petition credit extended to a Chapter 11 debtor, and the court can grant the DIP lender super-priority administrative expense status or priming liens to encourage lenders to provide needed operating capital.

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

A cramdown permits the bankruptcy court to confirm a plan of reorganization even if one or more classes of creditors reject it, provided the plan meets certain statutory fairness requirements.

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

The Bankruptcy Code allows the trustee to avoid and recover preferential transfers made to non-insider creditors within 90 days before the petition filing date.

(CCP) Certified Credit Professional Practice Test

(CCP) Certified Credit Professional Practice Test

CCP Bankruptcy & Insolvency in Credit Management 2