CIRA Legal & Regulatory Environment 2

Question 1

Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, which provision most significantly affects large corporate debtors?

Accepted Answer

Strict 18-month limit on exclusivity period

Answer

BAPCPA capped the exclusivity period at 18 months (plan filing) and 20 months (acceptance), ending the debtor's ability to indefinitely extend exclusivity.

Question 2

A Chapter 11 debtor wishes to pay prepetition wages to key employees. Which legal authority permits this without a full plan confirmation?

Accepted Answer

The first-day wage order approved under Section 507 priority

Answer

Courts routinely approve first-day wage orders based on Section 507(a)(4) priority status, allowing payment of prepetition wages up to the statutory cap.

Question 3

Which statement best describes the automatic stay under Section 362 of the Bankruptcy Code?

Accepted Answer

It is triggered upon filing and halts most collection actions against the debtor

Answer

The automatic stay under Section 362 takes effect immediately upon filing and broadly halts collection actions, lawsuits, and enforcement of liens against the debtor.

Question 4

In a Chapter 11 case, which party has the exclusive right to file a reorganization plan during the first 120 days?

Accepted Answer

The debtor-in-possession

Answer

Section 1121(b) grants the debtor-in-possession an exclusive 120-day period to file a reorganization plan, extendable by the court up to 18 months.

Question 5

What is the primary purpose of the absolute priority rule in bankruptcy reorganizations?

Accepted Answer

To require that senior classes be paid in full before junior classes receive any value

Answer

The absolute priority rule requires that each senior class of claims be paid in full before any junior class receives value, protecting creditor hierarchy.

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

CIRA Legal & Regulatory Environment 2