Which of the following is true about a voluntary bust-up?
A) Parent ceases to exist
B) Cash infusion to the parent
C) Parent stock is exchanged for subsidiary stock
D) New shares issued to the public
E) Parent remains in control

Question

Quizplus · Accepted Answer

In a voluntary bust-up, the parent company ceases to exist. This is the main characteristic of a bust-up, where the parent company undergoes a liquidation process and its assets are sold off to repay its liabilities. The subsidiary company may continue to exist as a standalone entity.

B, C, D, and E are not true about a voluntary bust-up. A cash infusion may not necessarily happen, as the purpose of a bust-up is to liquidate the company. There may not be any exchange of stock between parent and subsidiary companies. New shares may not be issued to the public as the company is undergoing a liquidation process. The parent company does not remain in control as it ceases to exist.

Which of the Following Is True About a Voluntary Bust-Up