CTP CTP Cash Flow Management & Liquidity Solutions 2

Question 1

DIP financing stands for:

Accepted Answer

Debtor-In-Possession financing

Answer

DIP (Debtor-In-Possession) financing is credit extended to a company that has filed for Chapter 11 bankruptcy to fund operations during restructuring.

Question 2

Which of the following is typically the FIRST operational priority in a liquidity crisis?

Accepted Answer

Meeting payroll obligations

Answer

Meeting payroll is the highest operational priority in a liquidity crisis because failure to pay employees triggers immediate operational collapse and legal consequences.

Question 3

A 'borrowing base certificate' in asset-based lending (ABL) determines:

Accepted Answer

The amount a company can borrow against eligible collateral

Answer

A borrowing base certificate calculates the maximum loan amount available under an ABL facility based on the value of eligible receivables and inventory.

Question 4

What is a 'springing cash dominion' provision in a credit agreement?

Accepted Answer

A lender's right to sweep cash into a controlled account when availability falls below a threshold

Answer

Springing cash dominion gives lenders the right to take control of cash flows when availability under a revolving credit falls below a specified threshold.

Question 5

Which technique involves selling receivables to a third party at a discount to obtain immediate cash?

Accepted Answer

Factoring

Answer

Factoring involves selling accounts receivable to a factor (third party) at a discount in exchange for immediate cash, improving short-term liquidity.

CTP - Certified Turnaround Professional Practice Test

CTP - Certified Turnaround Professional Practice Test

CTP CTP Cash Flow Management & Liquidity Solutions 2