Question 1

The fair-and-equitable test does not apply in Chapter 11 cases for individual debtors.

Accepted Answer

The fair-and-equitable test applies only to Chapter 11 cases involving corporate debtors, not individual debtors. Individual debtors must meet the requirements of confirmation under the Bankruptcy Code, but the fair-and-equitable test does not apply to them.

Question 2

The greatest number of bankruptcy filings are ____.
A) nonbusiness Chapter 7
B) Chapter 13
C) business Chapter 11
D) business Chapter 7
E) nonbusiness Chapter 7.

Accepted Answer

A

Question 3

Why would an individual debtor who operates a business prefer to reorganize under Chapter 13 rather than Chapter 11?

Accepted Answer

The cost of reorganizing under Chapter 13 is usually less than the cost of reorganizing under Chapter 11.

Question 4

The operative chapter of the Bankruptcy Code for liquidation is ____.
A) Chapter 5
B) Chapter 7
C) Chapter 11
D) Chapter 13
E) Chapter 5.

Accepted Answer

Chapter 7 provides for the liquidation of the debtor's assets and the distribution of the proceeds to creditors. It is often referred to as "straight bankruptcy."

Question 5

Explain why a business debtor may choose to liquidate under Chapter 11 rather than under Chapter 7.

Accepted Answer

The answer of Explain why a business debtor may choose...

Question 6

Domestic insurance companies and banks may not be debtors under the Bankruptcy Code.

Accepted Answer

Domestic insurance companies and banks are specifically excluded from being debtors under the Bankruptcy Code due to their unique regulatory environments and the potential systemic risks their bankruptcies could pose.

Question 7

The debtor that operates a business is eligible to file for bankruptcy under Chapters 11, 12, and 13.

Accepted Answer

Chapter 11 is for businesses, Chapter 12 is for family farmers or fishermen, and Chapter 13 is for individuals with regular income.

Question 8

An individual business debtor may file under Chapter 13.

Accepted Answer

An individual business debtor may file under Chapter 13 if they meet certain requirements, such as having primarily consumer debts and meeting certain debt limits. However, corporations or partnerships are not eligible for Chapter 13 and must file under Chapter 7 or Chapter 11.

Question 9

All farmers are eligible to be debtors under Chapter 12.

Accepted Answer

Chapter 12 bankruptcy is specifically designed for "family farmers" and "family fishermen" with regular annual income, and it has eligibility requirements regarding the amount of debt and the percentage of income coming from farming or fishing operations. Not all farmers meet these criteria.

Question 10

Although railroads are only eligible for Chapter 11 and stockbrokers and commodity brokers are only eligible for Chapter 7, all other business debtors are eligible to file under either Chapter 7 or Chapter 11.

Accepted Answer

This statement is true. Most business debtors can choose to file under either Chapter 7 or Chapter 11, but railroads are only eligible for Chapter 11 and stockbrokers/commodity brokers are only eligible for Chapter 7.

Question 11

Not all debtors are eligible to file under all the operative chapters of the Bankruptcy Code.

Accepted Answer

This statement is true. Different chapters of the Bankruptcy Code have different eligibility criteria and requirements that the debtor must meet in order to file for bankruptcy under that chapter.

Question 12

For a business debtor, discuss the factors that relate to the selection of the operative chapter of the Bankruptcy Code under which the case is filed. Include in your discussion eligibility as well as other factors.

Accepted Answer

The answer of For a business debtor, discuss the factors...

Question 13

For a nonbusiness debtor, discuss the factors that relate to the selection of the operative chapter of the Bankruptcy Code under which the case is filed. Include in your discussion eligibility as well as other factors.

Accepted Answer

The answer of For a nonbusiness debtor, discuss the factors...

Question 14

If a debtor operates a business and either is unable to reorganize or does not want to reorganize, the bankruptcy options are a Chapter ________ or a Chapter _________.

Accepted Answer

The answer of If a debtor operates a business and...

Question 15

In the calendar year ending December 31, 2004, the number of bankruptcy cases filed in the 94 bankruptcy courts across the country was ____.
A) more than 500,000 but less than 1,000,000
B) more than 1,000,000 but less than 1,500,000
C) more than 1,500,000 but less than 1,750,000
D) more than 1,750,000 but less than 2,000,000
E) more than 500,000 but less than 1,000,000.

Accepted Answer

In 2004, the number of bankruptcy cases filed in the United States was over 1,500,000 but less than 1,750,000.

Question 16

All business debtors except railroads, insurance companies, banks, savings and loan associations, and credit unions are eligible for Chapter 7.

Accepted Answer

This statement is true according to the Bankruptcy Code, which allows most business entities to file for Chapter 7 bankruptcy.

Question 17

Explain why business debtors seldom select Chapter 7.

Accepted Answer

The answer of Explain why business debtors seldom select Chapter...

Question 18

An individual nonbusiness debtor may file under Chapter 11.

Accepted Answer

While Chapter 11 is primarily used for reorganization of businesses, individual debtors can file under Chapter 11 as well if they do not qualify for Chapter 7 or Chapter 13 bankruptcy.

Question 19

An individual debtor may not receive a discharge under Chapter 11 until all plan payments have been made.

Accepted Answer

An individual debtor may receive a discharge under Chapter 11 before all plan payments have been made, provided that the debtor has completed all payments required under the plan and has complied with all other requirements of the Bankruptcy Code.

Question 20

Name three remedies available to a debtor under Chapter 13 that are not available under Chapter 7.

Accepted Answer

The answer of Name three remedies available to a debtor...

Quiz 9: Selecting the Appropriate Type of Bankruptcy Fling