CIRA Legal & Regulatory Environment 4

Question 1

Which type of bankruptcy proceeding under Chapter 11 allows a company to pre-negotiate a reorganization plan with major creditors before filing?

Accepted Answer

Prepackaged bankruptcy

Answer

A prepackaged bankruptcy involves negotiating and obtaining creditor acceptance of a reorganization plan before filing, significantly accelerating the court process.

Question 2

Under Section 365, which of the following is NOT a requirement for a debtor-in-possession to assume an unexpired lease?

Accepted Answer

Consent of all counterparties to the lease

Answer

Section 365 requires cure of defaults, adequate assurance of future performance, and court approval, but does not require consent of all counterparties for assumption.

Question 3

What is a 'stalking horse' bidder in a Section 363 asset sale?

Accepted Answer

An initial bidder who sets the floor price and terms for a competitive auction

Answer

A stalking horse bidder in a 363 sale is the initial buyer who negotiates the purchase agreement, setting a floor price and terms while the debtor seeks higher competing bids.

Question 4

In the context of cross-border insolvency, which international framework has the U.S. adopted to coordinate multinational bankruptcy proceedings?

Accepted Answer

The UNCITRAL Model Law on Cross-Border Insolvency (Chapter 15)

Answer

Chapter 15 of the Bankruptcy Code implements the UNCITRAL Model Law on Cross-Border Insolvency, providing a framework for cooperation in multinational insolvency cases.

Question 5

Which provision of the Bankruptcy Code allows a trustee or DIP to avoid a lien that was not perfected at the time of the bankruptcy filing?

Accepted Answer

Section 544, the strong-arm clause

Answer

Section 544(a) grants the trustee or DIP the powers of a hypothetical lien creditor, allowing avoidance of unperfected liens that a lien creditor could have avoided under state law.

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

CIRA Legal & Regulatory Environment 4