CIRA CIRA Bankruptcy & Restructuring Procedures

Question 1

What is the primary purpose of the 'automatic stay' that takes effect upon a Chapter 11 bankruptcy filing?

Accepted Answer

To immediately halt most collection actions and lawsuits against the debtor

Answer

The automatic stay under 11 U.S.C. § 362 immediately stops most creditor collection efforts, giving the debtor breathing room to reorganize without constant creditor pressure.

Question 2

Which party typically files a 'proof of claim' in a Chapter 11 bankruptcy case?

Accepted Answer

A creditor asserting a right to payment from the debtor's estate

Answer

Creditors file proofs of claim to formally assert the amount they are owed by the debtor, establishing their right to participate in plan distributions.

Question 3

In a Chapter 11 case, what is the 'exclusivity period'?

Accepted Answer

The window during which only the debtor may file a plan of reorganization

Answer

The exclusivity period (initially 120 days) gives the debtor the sole right to propose a reorganization plan, preventing creditors from immediately introducing competing plans.

Question 4

Which of the following best describes a 'prepackaged bankruptcy' (prepack)?

Accepted Answer

A Chapter 11 filing where the reorganization plan is already voted on and approved by creditors before the petition is filed

Answer

In a prepack, the debtor solicits and obtains creditor votes on a restructuring plan before filing, dramatically shortening the time spent in bankruptcy court.

Question 5

Under the Bankruptcy Code, what is a 'preference payment'?

Accepted Answer

A payment made to a creditor within 90 days before bankruptcy that gives that creditor more than it would have received in liquidation

Answer

Preference payments are transfers made to certain creditors shortly before bankruptcy that can be clawed back by the trustee to restore equality among similarly situated creditors.

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

(CIRA) Certified Insolvency & Restructuring Advisor Practice Test

CIRA CIRA Bankruptcy & Restructuring Procedures