1) Which of the following is NOT true regarding the application of the Absolute Priority Rule...

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Finance

1) Which of the following is NOT true regardingthe application of the Absolute Priority Rule in the distributionof liquidation distributions?
a) Secured creditors are not on the APR list as they areentitled to the proceeds from the sale of the secured assets.
b) if an asset is sold and the proceeds are more than requiredto pay the secured creditors, the remainder of the funds go to payunsecured creditors.
c) If an asset is sold and the proceeds are insufficient to paythe secured creditors, the remainder of the claim becomes anunsecured claim.
d) Negotiation can alter the order in the APR
e) The APR order is strictly followed in all bankruptcies to theextent that claimants not on the APR list are not entitled to anydistribution from the liquidation.
2) Which of the following is correct?
a) A bankruptcy petition can only be filed by the firmitself.
b) The APR order is strictly followed in all bankruptcies to theextent that claimants not on the APR list are not entitled to anydistribution from the liquidation.
c) Management of the firm is usually not permitted to continueto manage the firm in bankruptcy.
d) A frim can be forced into bankruptcy by its creditors or canvoluntarily file bankruptcy itself.
e) A bankruptcy petition can only be filed by a firm'screditors.
3) The approval of a bankruptcy plan by themajor creditors of a firm in advance of a legal filing is calleda:
a) prepacked bankruptcy
b) forced bankruptcy
c) debtor-in-possession bankruptcy
d) Preplanned Bankruptcy
e) Involuntary Bankruptcy
4) The Bankruptcy Abuse Prevention and ConsumerProtection Act of 2005 included all the following changed to oreffects on the bankruptcy process EXCEPT:
a) More prepackaged bankruptcies are expected.
b) After 18 months, creditors may file a reorganization plan oftheir own.
c) BAPCPA permits large payments to retain key employees.
d) Firms operating under Chapter 11 are no longer the only firmspermitted to file reorganization plans
e) Debtor-in-possession financing is no longer permitted
5) A Section 363 Bankruptcy has all of thefollowing Characteristics EXCEPT:
a) Plan must be approved by a vote of interested parties,
b) A stalking-horse initial bidder.
c) Auction-like quality.
d) Simplicity
e) Speed
6) Direct Bankruptcy costs can include all ofthe following EXCEPT:
a) Consultant expenses
b) loss of important customers
c) general administrative expenses
d) accounting fees
e) legal fees

Answer & Explanation Solved by verified expert

4.4 Ratings (808 Votes)

Q1 e is the correct answer as secured creditors are not on the APR list as they are entitled to the proceeds from the sale of the secured assets Secured creditors always have an upper hand See Answer

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1) Which of the following is NOT true regardingthe application of the Absolute Priority Rule in the distributionof liquidation distributions?a) Secured creditors are not on the APR list as they areentitled to the proceeds from the sale of the secured assets.b) if an asset is sold and the proceeds are more than requiredto pay the secured creditors, the remainder of the funds go to payunsecured creditors.c) If an asset is sold and the proceeds are insufficient to paythe secured creditors, the remainder of the claim becomes anunsecured claim.d) Negotiation can alter the order in the APRe) The APR order is strictly followed in all bankruptcies to theextent that claimants not on the APR list are not entitled to anydistribution from the liquidation.2) Which of the following is correct?a) A bankruptcy petition can only be filed by the firmitself.b) The APR order is strictly followed in all bankruptcies to theextent that claimants not on the APR list are not entitled to anydistribution from the liquidation.c) Management of the firm is usually not permitted to continueto manage the firm in bankruptcy.d) A frim can be forced into bankruptcy by its creditors or canvoluntarily file bankruptcy itself.e) A bankruptcy petition can only be filed by a firm'screditors.3) The approval of a bankruptcy plan by themajor creditors of a firm in advance of a legal filing is calleda:a) prepacked bankruptcyb) forced bankruptcyc) debtor-in-possession bankruptcyd) Preplanned Bankruptcye) Involuntary Bankruptcy4) The Bankruptcy Abuse Prevention and ConsumerProtection Act of 2005 included all the following changed to oreffects on the bankruptcy process EXCEPT:a) More prepackaged bankruptcies are expected.b) After 18 months, creditors may file a reorganization plan oftheir own.c) BAPCPA permits large payments to retain key employees.d) Firms operating under Chapter 11 are no longer the only firmspermitted to file reorganization planse) Debtor-in-possession financing is no longer permitted5) A Section 363 Bankruptcy has all of thefollowing Characteristics EXCEPT:a) Plan must be approved by a vote of interested parties,b) A stalking-horse initial bidder.c) Auction-like quality.d) Simplicitye) Speed6) Direct Bankruptcy costs can include all ofthe following EXCEPT:a) Consultant expensesb) loss of important customersc) general administrative expensesd) accounting feese) legal fees