CIRA Legal & Regulatory Environment 5

Question 1

A company filed Chapter 11 and wants to obtain postpetition financing (DIP financing). Which section of the Bankruptcy Code governs this?

Accepted Answer

Section 364

Answer

Section 364 governs postpetition financing, allowing courts to authorize DIP loans with superpriority claims, priming liens, or other enhanced protections to attract lenders.

Question 2

What distinguishes a 'structured dismissal' of a Chapter 11 case from a traditional plan confirmation?

Accepted Answer

A structured dismissal resolves the case without a reorganization plan, often including negotiated distributions

Answer

A structured dismissal resolves a bankruptcy case without full plan confirmation, often through a negotiated order that includes distributions and releases but bypasses the plan process.

Question 3

Under WARN Act provisions relevant to restructuring, what notice period must most employers provide before mass layoffs?

Accepted Answer

60 days written notice

Answer

The federal WARN Act (29 U.S.C. § 2101) generally requires 60 days' advance written notice before plant closings or mass layoffs affecting 50 or more employees.

Question 4

Which section of the Bankruptcy Code governs the treatment of pension plan obligations (PBGC claims) in a corporate restructuring?

Accepted Answer

ERISA Title IV as enforced through PBGC's bankruptcy priority claims

Answer

PBGC pension obligations are governed by ERISA Title IV; the PBGC asserts substantial priority and unfunded benefit liability claims in bankruptcy, often ranking as major creditors.

Question 5

In a bankruptcy case, what is the legal effect of plan confirmation on claims not addressed in the confirmed plan?

Accepted Answer

Confirmation discharges all prepetition debts except those specifically provided for in the plan

Answer

Under Section 1141(d), plan confirmation generally discharges the debtor from all prepetition debts, whether or not a claim is provided for in the plan or the creditor voted.

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

CIRA Legal & Regulatory Environment 5