TMA Crisis Management 2

Question 1

What is an 'automatic stay' in Chapter 11 bankruptcy?

Accepted Answer

A court-imposed halt on most collection actions and legal proceedings against the debtor

Answer

A pause on all management decisions

Answer

An agreement among creditors not to sell their debt

Answer

A freeze on employee terminations

Question 2

What is 'employee retention' a key concern during a turnaround?

Accepted Answer

Key talent leaving can destroy the operational capability needed to execute the turnaround

Answer

Employees are the primary creditors in bankruptcy

Answer

Employment law requires retention bonuses in all restructurings

Answer

Employees vote on the reorganization plan

Question 3

What is a 'key employee retention plan' (KERP) designed to do?

Accepted Answer

Provide financial incentives for critical employees to stay through the restructuring process

Answer

Replace departing executives with cheaper staff

Answer

Fulfill a legal obligation under bankruptcy law

Answer

Compensate employees for lost wages during the crisis

Question 4

What is a 'bridge loan' in the context of corporate distress?

Accepted Answer

Short-term emergency financing to keep a company operational while a longer-term solution is arranged

Answer

A permanent refinancing solution

Answer

A loan from the bankruptcy court

Answer

A government-backed rescue facility

Question 5

Why is speed critical in a turnaround engagement?

Accepted Answer

Every day of distress consumes cash, erodes stakeholder confidence, and narrows the range of viable options

Answer

Faster turnarounds are required by bankruptcy law

Answer

Speed reduces the cost of restructuring advisors

Answer

Courts penalize slow restructurings financially

Question 6

What is 'force majeure' and how is it relevant in corporate crisis management?

Accepted Answer

A contract clause excusing performance due to extraordinary, unforeseeable events

Answer

A French bankruptcy term for voluntary liquidation

Answer

A regulatory requirement for financial disclosures

Answer

A type of lender default clause